BATS Expands Risk Tools, Kill Switch to All Members
November 27, 2012
BATS Global Markets has rolled out a set of tools available at no charge to all members of its U.S. equities and equity option markets to help them mitigate risk.
The tools are available to all members of the BATS BZX Exchange, BYX Exchange and BATS Options market.
In the past these tools were only available to sponsored members. “We began offering all of the risk management tools, with the exception of the aggregated credit limit risk check, to Sponsored Members beginning December 17, 2009,” said Chris Isaacson, chief operating officer at BATS Global Markets. “We added the aggregated credit limit risk check feature in November 2011. Over the past few months, we felt it made a lot of sense to make these risk management tools available to all of our members at no cost and we are pleased to be making these tools available to all members beginning today.”
The customizable tools, which had previously only been available to Sponsoring Members, provide members with pre-trade risk protection by enabling members to set critical parameters for orders and prevent unwanted executions. Some of the key features of the risk management tools include the ability to set order restrictions, maximum per-order limits, and order cutoffs, or a member-controlled “kill switch,” which would cancel all open orders and block new orders when pre-specified thresholds are hit.
“Our risk management tools provide supplemental controls and safeguards to our members to help them mitigate risk and we’re pleased to be expanding access to these tools to all members. We believe that a multilayered approach to risk management, with various risk checks in place both on the member and exchange side during the life of an order, is fundamental to ensuring markets remain resilient,” said BATS Global Markets President and CEO Joe Ratterman. “Providing universal access to these types of risk management tools at no cost to our members supports our mission of making markets better.”
“We are confident that these risk controls and kill switch functionality will go a long way to responding to customer demand for exchange specific risk mitigation, and we also remain engaged with the industry in the U.S. and Europe on the potential development of market-wide risk controls that could further improve the market’s safe functioning as well as increase investor confidence in our markets,” he added.
“We are in constant dialogue with members about what tools and services would help enhance their trading experience on the BATS markets,” Isaacson said. “We know risk management is a top priority for our members and many had requested that we provide supplemental tools to help provide an additional layer of risk management to their trading activities.”
The risk management controls can be configured through the BATS Member Web Portal or automated and systemically controlled through a Web application programming interface.