Bats Chi-X Europe applies to FSA to become European exchange

LONDON Tue Nov 6, 2012 12:28pm EST

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LONDON Nov 6 (Reuters) - Bats Chi-X Europe, the largest alternative trading venue in the region, has applied to the British regulator to be registered as a fully fledged exchange in a move to further boost competition for Europe's top stock markets.

Bats Chi-X Europe, which is owned by its largest banking and trading clients, has made an application to the Financial Services Authority (FSA) to become a Registered Investment Exchange, according to two sources close to the firm.

The firm wants to put itself on a level footing with Europe's regulated exchanges and compete for business from some retail and institutional clients mandated to trade on regulated exchanges.

Bats Chi-X Europe sees itself missing out to rivals such as the London Stock Exchange, NYSE Euronext and Deutsche Boerse because it is not an exchange.

"This seems like a natural progression for the company to further legitimise its business," said Peter Lenardos, an analyst at RBC Capital Markets.

Registration as a full exchange in London will also entitle Bats Chi-X Europe to compete for listings, though a source close to the company said this was not the main driver for the move

Bats Chi-X Europe declined comment.

The application marks the latest challenge by Bats Chi-X Europe to undermine the dominant trading positions of Europe's top stock markets.

Bats Chi-X Europe is the region's top pan-European trading venue with a European market share of 24.5 percent, according to Thomson Reuters data.

This puts it on a par with the LSE Group, which has 25.9 percent of European activity, though this business is largely concentrated in London and Milan.

"Competition in the exchange industry is intense. We expect intense competition to always be present in the exchange industry," said Lenardos.

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