Tuesday 9th February 2016
NEWS TICKER: February 9th 2016: The Polish Financial Supervision Authority (KNF) at its meeting today confirmed the appointment of Małgorzata Zaleska as President of the Management Board of the Warsaw Stock Exchange, following her appointment as president on January 12th. Zaleska is the director of the Institute of Banking, Warsaw School of Economics; the Chairperson of the Committee of Finance Sciences of the Polish Academy of Sciences; a member of the NBP Economic Research Committee; a member of the Central Commission for Degrees in Finance – Today’s equity markets tell a tale of fears of a global slowdown with even the US considered a candidate for recession. The US session yesterday was not pretty, with the S&P500 down 1.42%. The index has lost around 9% of its value this year and is now 13% below the nominal high that it reached last year. The DJIA was down 1.1% and Nasdaq100 fell 1.59%. The Nasdaq100 is now 17.92% below the nominal high that it reached last year. Swissquote says: “The sentiment is risk-off at the moment, with gold reaching $1,200 for the first time since June. Gold’s bullish momentum continues yet commodity linked currencies such as the AUD and NZD failed to gain the advantage as outside precious metals and other commodities broadly fell. In particular, WTI Crude is now back around below $30 a barrel over continued oversupply concerns. Markets are now fearing that this period of lingering low oil prices could last a long time”. – In the Asian session Japanese stocks fell more than 5% and the yield on the benchmark government bond dropped into negative territory for the first time. The decision by the Bank of Japan to introduce negative interest rates looks to have pushed down yields for both short and longer termed bonds. In afternoon trading in the Asian session, the benchmark 10-year government bond was yielding minus 0.025; in other words, investors were willing to lend the over-indebted Japanese government money for 10 years and get back less than they put in. Remember that Japanese sovereign debt is more than double the country’s GDP. The question is now, how far down can yields go? Moreover, when will central banks stop flirting with negative interest rates. It is a dangerous policy. The stock market took the brunt of investor fears today, as the Nikkei Stock Average closed y down 5.4%, falling 918.86 points to finish at 16,085.44. This is a sizeable drop and the largest one-day fall for about two and a half years. Yet again, the yen did well, rising against the US dollar to 114.80. Financial shares took the brunt of today’s pain with Mitsubishi UFJ Financial Group Inc. (MTU) shares closing down 8.7%, and Nomura Holdings losing 9.1%. Australia's S&P/ASX 200 ended the session 2.9% lower, and New Zealand's S&P/NZX 50 was down 1.3%. India's Sensex was 1.2% lower. Chinese, Singapore and Korean markets are closed today. In Europe, equity futures are mixed. The CAC40 has dropped 0.22%, the DAX is down 0.21% while the FTSE100 is unchanged, but there’s still half a day’s trading to go.

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20-20: BATS extends its reach

Thursday, 15 December 2011
20-20: BATS extends its reach When Joe Ratterman took over as chief executive officer of BATS in July 2007, he named his priorities as price innovation, including data for free, smart and fast technology, and good customer service. Within a few years he has taken BATS from a fledgling trading platform to a company which some value at $1.1bn, based on an upcoming flotation aiming to raise $100m. Ruth Hughes Liley analyses the firm’s contribution to diversity in the global trading market as it reposes in a “quiet period” prior to its IPO. http://www.ftseglobalmarkets.com/

When Joe Ratterman took over as chief executive officer of BATS in July 2007, he named his priorities as price innovation, including data for free, smart and fast technology, and good customer service. Within a few years he has taken BATS from a fledgling trading platform to a company which some value at $1.1bn, based on an upcoming flotation aiming to raise $100m. Ruth Hughes Liley analyses the firm’s contribution to diversity in the global trading market as it reposes in a “quiet period” prior to its IPO.

December 2011 prove a landmark for BATS Global Markets. During the month, the UK Competition Commission official was expected to ink its approval of BATS’ takeover of Chi-X Europe, Europe’s largest multilateral trading facility (MTF). The new BATS Chi-X Europe will be the largest trading centre in Europe in terms of market share and notional value traded. In the first quarter of 2011, Chi-X Europe accounted for €454.6bn traded while BATS own MTF, BATS Europe, traded €171.2bn. Chi-X Europe will add a derivatives offering to the combined company through an agreement with Russell Investments.

It was also a month in which BATS Global Markets was set fair to challenge NYSE Euronext and NASDAQ OMX with a new listings service on BZX. BATS operates two stock exchanges in the US, the BZX Exchange (BZX) and the BYX Exchange (BYX), which account for around 10% to12% of all equity trading in the United States on a daily basis. BATS Listings will be headed by Brian King, who has managed client relationships at BATS for four years.



Launched from a suburb of Kansas City, Missouri, onlookers were unsure about the success and direction of BATS at its launch in 2005.  Started by a handful of people and still only employing barely more than 100 worldwide, in May 2011 it filed with the SEC to raise $100m in a flotation, which some estimates say values the company at $1.1bn. The flotation will fund acquisitions and provide an exit strategy for some of its original investors, which include Getco, Credit Suisse, Morgan Stanley and Deutsche Bank among others.

Chief executive officer (CEO) Joe Ratterman’s expansion plans for BATS—originally just a simple electronic communications network—have coincided with huge upheavals in the financial markets. In October 2008, in the middle of the fallout from the Lehman Brothers crisis, it launched a multilateral trading platform, BATS Europe. At the same time on the other side of the Atlantic, it also launched BZX. Work on the European platform was complete in six months with Ratterman saying at the time: “This is a testament to our focus and determination to move at ‘BATS speed’ and the drive to simply get things done.”  The platform is headed by chief executive officer Mark Hemsley.

In 2007, BATS represented around 15% the size of NASDAQ. In 2009, it represented around 55%. Today its 12% US equities market share compares with NASDAQ’s 18%. For its other businesses, US equity options market BATS Options holds around 3.8% matched market share and BATS Europe just over 5% as of October 2011.

Not content with expansion at home and in Europe, BATS is also looking further afield. The firm has set up a partnership with Claritas, a Brazilian asset management firm, to work on creating a new stock exchange in the country, with attendant clearing and depositary services. Brazil is the fourth-largest market in the world, with opportunities to challenge the incumbent stock exchanges.

It is that “better place to do business” which has been BATS’ focus with Ratterman at the helm. BATS originally stood for Better Alternative Trading System and its logo incorporates the slogan “Making Markets Better”.  “The last two years have been very exciting and rewarding as we took BATS from a napkin drawing to one of the fastest-growing market centres in the nation,” he told members then. “Because our employees and investors come from the industry, we are well-positioned to help make the markets a better place to do business.”

While it is acknowledged that a listing business will add to BATS’ revenue, some believe they will find it harder to make a success of it than they did with their trading business; high-frequency trading provided a ready-made market for the trading business.

Ratterman bases his success on the technology which underpins BATS. It includes parallel routing strategies which aim to provide best execution more efficiently while accessing multiple market venues simultaneously. Several matching engines provide up to five times more capacity than required and it has kept latency low.

Ratterman has also implemented innovative pricing with BATS National Best Bid and Offer (NBBO) Setter programme, which rewards clients not just because of size but also because of actions which improve market quality. Ratterman says: “This has been such a hit on the BATS Options market that we have recently rolled it out on our two US equity exchanges as well. It’s the first of many innovations to come from BATS based on a new paradigm shift in pricing models.”

Pricing has been used as a strategy to expand. An initial aggressive fee structure that lost money on every trade in order to attract customers was successful: the firm now claims more than 300 broker-dealer customers. In October 2011, the firm began to provide rebates for firms taking liquidity from the BYX Exchange order book for all securities priced $1 or above. Customer service is one of Ratterman’s original stated aims for BATS—in 2007 Ratterman told his members: “We are listening to you, our customers. We want to be your market.”

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