Bats Global Markets is to launch the Bats Auction Mechanism (BAM), new functionality that provides price improvement opportunities for orders sent to its EDGX Options Exchange.
Bats plans to launch BAM in November, pending SEC approval. The company’s two US options exchanges, EDGX and BZX, set a combined record with market share of 11.7 per cent in June while remaining the market leader in single-leg equity options trades with 19 per cent market share.
BAM is an options auction process that provides Members with an opportunity for price improvement for the Member’s client orders. The BAM functionality alerts all Members at the start of an auction in order to maximise the price improvement opportunity and allows agency orders to trade against the contra party specified by the initiating Member or other Members responding to the auction.
In addition, Bats will introduce a new feature called the Priority Quote Allocation. This functionality provides incentives for a broader range of participants to maintain two-sided quotes, which helps to keep tighter bid-ask spreads in continuous market trading.
Bryan Harkins, Executive Vice President and Head of US Markets at Bats, says: “BAM is the natural evolution for the Bats Options business as we move to serve customer needs beyond our market-leading price-time priority options exchange, BZX. We are deeply committed to the US Options market and plan to aggressively expand our product suite to deepen liquidity and improve the execution experience for market participants in the coming months.”
BAM will run continuously throughout the trading day on EDGX, the pro-rata Bats’ options market launched in November 2015.
