Bats Global Markets has launched the Bats Auction Mechanism (BAM), providing price improvement opportunities for customer orders.
The company began rollout of the new functionality on the EDGX Options Exchange on 4 January and completed it, with no disruption to customers, on 10 January.
The company’s two US options exchanges, EDGX and BZX, set a combined market share record for full-year 2016 with 11.1 per cent vs 9.6 per cent in 2015, while remaining the market leader in single-leg equity options trades with 17.4 per cent market share.
“We’re pleased to announce this functionality, in response to significant customer demand,” says Kapil Rathi (pictured), senior vice president, options business strategy, at Bats. “While designing BAM, we worked with all of our customers and incorporated their feedback to bring the best auction process available in the options industry today, focusing on various issues and gaps that other exchanges haven’t addressed so far. Partnering with clients drives the Bats business and, as we prepare to join with the CBOE team, we look forward to unveiling additional innovations in the future.”
In September, Bats Global Markets entered an agreement to be acquired by CBOE Holdings. The transaction is expected to close in the first half of 2017, pending customary closing conditions, including regulatory approval.
BAM is an options auction process that provides members with an opportunity to improve the price of their customer orders. The 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. BAM was approved by the SEC on 3 January.
A new feature called the Priority Quote Allocation was also launched in January. 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.
BAM runs continuously throughout the trading day solely on EDGX, the pro-rata Bats’ options market launched in November 2015.