BATS Chi-X applies to be stock exchange

LONDON could gain a new stock exchange after BATS Chi-X Europe applied to become a fully-fledged stock exchange, a source close to the firm said yesterday.

The Financial Services Authority could take between six months and a year to process the company’s application to become a Registered Investment Exchange.

Once completed it would allow the company – currently classed as a Multilateral Trading Facility – to conduct IPOs on its own platform, although this is not thought to be the firm’s primary objective. Instead it hopes to target business from clients who will only trade on regulated exchanges.

At the moment BATS Chi-X Europe controls around a quarter of pan-European trading, offering a low-cost alternative to the continent’s major exchanges.

“BATS Chi-X Europe appears to be competing with its own business but this seems like a natural progression for the company to further legitimise its business,” said Peter Lenardos, an analyst at RBC Capital Markets.

“We expect this announcement to have little impact on London Stock Exchange’s market share.”