BATS gets go ahead to buy Chi-X Europe

STOCK trading platforms Chi-X Europe and BATS Global Markets were given the final green light to merge by the competition watchdog yesterday, clearing the way for them to control a quarter of Europe’s equities volume.

The UK Competition Commission rubber-stamped an earlier provisional decision and will allow the exchanges to complete a $300m (£192m) deal they started discussing a year ago.

BATS Global is a formidable presence in the US market, where it operates the third-biggest equities market, but failed to gain ground in the European market where its rival Chi-X emerged as the biggest equities exchange by trades.

Chi-X had almost a fifth of the European cash equities market with turnover of €546.6bn in the third quarter of the year, whereas BATS Europe had a 5.5 per cent market share and €194.2bn turnover.

BATS will now buy Chi-X to gain its presence in the market and take on established exchanges such as the London Stock Exchange and NYSE Euronext by creating a new entity called BATS Chi-X Europe.

BATS chief executive Joe Ratterman said the deal would “create an even more formidable competitor in pan-European securities trading, offering greater market efficiencies for the entire investing community.”

The Commission had investigated their merger, which will make them Europe’s third-biggest equity trading market, over concerns that it would cut out a source of competition.

Chi-X had turnover of €145.7bn in October, behind the London Stock Exchange Group with €191.7bn turnover when its Turquoise multilateral platform was included. The third-biggest, NYSE Euronext, had turnover of €112.6bn, figures from the Federation of European Securities Exchanges showed.

The deal comes as a second stock market merger, between Deutsche Boerse and NYSE Euronext, remains under scrutiny from Europe’s competition authorities.

Their $10.2bn merger would create the biggest exchange in Europe, with a turnover of €205.6bn by October’s figures.