BATS gets regulatory nod for second U.S. options exchange

By John McCrank
NEW YORK, Aug 10 (Reuters) - BATS Global Markets said on
Monday it has received regulatory approval to open its second
U.S. options exchange, set to be launched on Nov. 2, as the
exchange operator tries to win a bigger share of the U.S.
market.
EDGX Options will be the 13th U.S. options exchange.
Incoming options orders will be prioritized on a pro rata basis,
which means they will be sorted by price, and if there are two
or more orders at the best price, trades will be allocated
proportionally according to size. On BATS's existing options
exchange, BZX Options, orders are prioritized based on price and
the time they entered the market.
"Two-thirds of U.S. options market volume is executed on
exchanges with a pro rata model, and we believe we can help make
markets better for participants in this segment of the market,"
Bryan Harkins, head of U.S. markets at BATS, said in a
statement.
BATS had a 10.8 percent market share of U.S. options in
July, according to the Options Clearing Corp.
International Securities Exchange Holdings (ISE) filed an
application with regulators in September for its third options
exchange, ISE Mercury, which has yet to open. ID:nL2N0RU151
Some traders have complained there is little difference
among the various options exchanges, adding that the glut just
adds to the complexity of the market.
BATS competes with options-exchange operators NYSE, owned by
Intercontinental Exchange Inc ICE.N ; CBOE Holdings CBOE.O ;
Nasdaq OMX Group NDAQ.O ; ISE, owned by Deutsche Boerse
DB1Gn.DE ; BOX Options Exchange, owned by TMX Group X.TO ; and
Miami International Holdings Inc.
BATS said it expects all of the industry's multiply listed
options to be available for trading on EDGX Options, and that
its members will be to start connecting to the new trading
platform on Aug. 17.
The Kansas City-based company, which is the No. 2 U.S. stock
exchange operator, also runs the largest pan-European stock
market, BATS Chi-X Europe, and a foreign exchange trading
platform called Hotspot.