BATS Chi-X Europe launches European listings business
BATS Chi-X Europe says it can help bring down the cost of ETF trading in Europe
BATS Chi-X Europe has begun its pan-European listings business with the start of trading in two exchange-traded funds. The firm’s strategy is to focus on ETFs, where it believes it has found an opportunity to cut costs.
The new ETF products are the iShares MSCI Emerging Markets UCITS ETF and the iShares MSCI World Minimum Volatility UCITS ETF. iShares is the ETF platform of asset manager BlackRock. MSCI is a ratings and index provider, which assesses the viability of countries around the world as an investment destination. Exchange-traded funds are typically baskets of securities, which are used as a means by investors to get access to an attractive market or industry sector, without having to commit to stock-picking.
BATS Chi-X Europe chief executive Mark Hemsley told Banking Technology in October that his plan is to grow the size of the European ETF market, which was still significantly smaller than its US counterpart at $421 billion against $1.5 trillion respectively in May 2013. Hemsley emphasised BATS Global Markets’ reputation as a low-cost option compared to competitors such as the London Stock Exchange and other national venues; and the fact that it is a pan-European venue with access to 15 different European countries. These factors should lead to improved consumer choice, and lower prices, he said.
The discrepancy in size between the European and US ETF markets has long been pointed out by financial services observers, who note that the US and Europe have similar GDP figures ($15.7 trillion and $16.6 trillion respectively) while the US has a smaller population than the EU (314 million and 507 million respectively). According to Hemsley, the future involves fungible ETF contracts that can be cleared anywhere the investor chooses and netted at a reasonable cost. It also involves a reduction in cost and complexity, as well as duplicate listings.
“With the launch of the first iShares ETFs, on the exchange, market participants now have access to the many benefits and efficiencies of our pan-European reach,” he said. “We are pleased to share this milestone with our partners at iShares and see this as an important step in our ongoing commitment to improve liquidity and transparency in exchange-traded products for the pan-European trading community.”
BATS Global Markets already operates an exchange business in the US, where it has recently agreed to merge with competitor Direct Edge after a fierce market share battle that lasted several years. The deal is not finalised but is understood to be at an advanced stage.
In March 2012, BATS suffered a disaster when it was forced to withdraw its own IPO on its home platform after a technical glitch reduced the value of its shares to $0.0002 within minutes.
