Securities exchange operators BATS Global Markets (BATS) and Direct Edge Holdings (Direct Edge) are to merge. Financial terms will not be disclosed for the transaction, which is expected to close in the first half of 2014, subject to regulatory approvals.
Current BATS CEO Joe Ratterman will remain in the same role and current Direct Edge CEO William O’Brien will be President. Bryan Harkins of Direct Edge will join the combined company as an integral member of the senior executive team.
Ratterman says: “This agreement is an important milestone for the US equities market and other markets around the globe as it will combine two organisations that have been innovative in creating a more competitive marketplace to benefit all investors.”
O’Brien says: “Direct Edge and BATS were both founded on a commitment to create an optimal trading experience for a diverse member base, from retail investors to broker-dealers to institutions. Together, the best of both organisations will work to further improve how the world trades, consumes market data, and accesses capital markets.”
The combined company will use the proprietary BATS technology and will be headquartered in the Kansas City area with additional offices in Jersey City, NJ, New York and London. All four US equity exchanges operated by BATS and Direct Edge will remain in operation under the agreement – the BATS BZX and BYX Exchanges and the Direct Edge EDGX and EDGA Exchanges.
In addition to the aforementioned markets, BATS operates a US equity options market and BATS Chi-X Europe, the largest stock exchange in Europe. Direct Edge continues working towards opening an equity market in Brazil.
BATS was advised by Broadhaven Capital Partners on the transaction and Direct Edge was advised by BofA Merrill Lynch and Evercore Partners.