LONDON Oct 7 BATS Chi-X Europe, the largest alternative trading venue in the region, said on Tuesday it plans to launch a pan-European listings business in November.
The company, a subsidiary of U.S. exchange operator BATS Global Markets, said two BlackRock iShares exchange-traded funds (ETFs) will be the first products to trade on the exchange.
ETFs are essentially mutual funds that trade on exchanges like individual securities and carry lower fees than mutual funds.
They have become increasingly popular among retail investors seeking cheap access to indexes without having to buy underlying securities.
BATS Chi-X Europe, which was granted investment exchange status by the British financial regulator in May, hopes its new listing business can further boost the $350 billion European ETF market, which lags behind its $1.5 trillion U.S. counterpart.
Traditionally European ETFs have been issued and traded on one or more national stock exchanges. A trade is settled in the national securities depository of the country in which it is executed.
If an investor based in one country wants to buy or sell an ETF listed in another, he or she must have depository accounts in both countries, keep each account updated with any changes in the positions and follow post-trading rules in both jurisdictions.
BATS Chi-X Europe Chief Executive Mark Hemsley said the pan-European exchange will make trading ETFs more efficient, as trades can be cleared in one venue and settled in a depository designated by the ETF issuer.
The end result will be greater liquidity in European ETFs and lower costs, he said.
Hemsley added that the new business puts BATS in a unique competitive space versus national exchanges like the London Stock Exchange and Germany's Deutsche Boerse, which also list ETFs.
"It's difficult for incumbent exchanges because they can only offer what they have been offering ... nationally oriented sets of listings," Hemsley said.
"We've got fairly unique attributes in terms of being a pan-European business and a RIE (Registered Investment Exchange) status, which together are reasonably difficult to replicate."