BATS Global Markets reported its 2014 results last week. Quite a year for an exchange that weathered the media and regulator storm in the wake of Michael Lewis’ “Flash Boys.”
Despite all the negativity surrounding the HFT space, BATS posted its best market share in US equities and options and held the top spot in equity market share in Europe.
BATS’s equity options total market share was 6.3% in December 2014, up from just 2.8% a year earlier, according to the OCC, and comes during a time when the options industry continues to show slow but steady growth. Last year, the 12 US options markets posted total volume across all exchanges of 4.11 billion contracts, an increase of almost 4 percent from a year earlier.
Given the rocky start in equities in 2015, this may be another banner year for BATS. The Kansas City-based exchange also announced it plans to open an office in Chicago and expand its New York office, as part of its Direct Edge purchase.
It also released on Tuesday, plans to shake up the equity markets with a new fee structure which it says will reduce fees by more than 80% in the most liquid US securities. BATS says this could reduce costs for the industry by $850 million annually.
So now, we’re seeing the thaw from the Dodd-Frank Act and rule making process, as exchanges begin to offer new and different cost savings to participants and customers. BATS is certainly not alone here. The Intercontinental Exchange is also looking to change its equities structure and other exchanges are looking for new and compelling ways to lower costs within a new framework of higher regulation and higher capital requirements.
Regulatory certainty + volatility + innovation = opportunity. Let’s see if the folks from Kansas City can continue to swing a hot bat in 2015.