BATS close to tie-up with Chi-X

A THIRD stock market merger between BATS Global Markets, the third-largest US exchange, and Chi-X Europe, a major European platform, is due to complete today.

Sources told City A.M. the deal was “very close” to completion and an announcement should be made today, ending weeks of talks.

The deal is likely to have been spurred on by a week-long frenzy of stock market mergers in which the London Stock Exchange and Toronto Metals Exchange agreed to combine and Deutsche Boerse and NYSE Euronext confirmed their tie-up.

Chi-X is Europe’s biggest multilateral trading platform with about 18 per cent market share, while BATS in Europe has about seven per cent, giving their combined group a bigger presence than the LSE on 24 per cent.

But a merged NYSE Euronext and Deutsche Boerse group would control about 28 per cent of the market.

BATS and Chi-X Europe compete with national stock exchanges on equity trades and need scale and market share to remain profitable.

Launched in 2007, Chi-X Europe is owned by a Nomura subsidiary and 13 banks including Citigroup, Morgan Stanley and Credit Suisse. Kansas-based BATS was founded in 2005 and is also privately owned.

Chi-X Europe has been up for sale since mid-2010 and has hired Lexicon Partners to advise it. Chi-X Europe and BATS both declined to comment.