In the realm of financial markets, the Better Alternative Trading System (BATS) stands as a noteworthy name that, over the years, transformed into Bats Global Markets. This article delves into the intriguing journey of Bats Global Markets, its evolution from an innovative trading platform to a prominent exchange, and its ultimate acquisition by the Cboe Options Exchange.

Understanding the Origins of Bats Global Markets

Bats Global Markets, initially known as the Better Alternative Trading System (BATS), emerged on the scene in 2005. Right from its inception, it presented itself as an innovative alternative to traditional exchanges, aiming to provide a more efficient and technologically advanced platform for investors.

In 2008, BATS ventured into European markets, and to reflect its broader scope and global ambitions, the company rebranded itself as Bats Global Markets. This strategic move was pivotal in setting the stage for its growth and expansion.

Competing with Industry Giants

Bats Global Markets quickly evolved into a formidable competitor for established exchanges like the New York Stock Exchange (NYSE) and Nasdaq. By 2016, it had secured the position of the second-largest U.S. equity exchange in terms of market share. Notably, it also held the distinction of being the largest exchange-traded fund (ETF) exchange.

Within the United States, Bats Global Markets made significant strides. In 2008, its BZX Exchange was granted status as a registered exchange, and in 2010, the BYX Exchange was introduced. Moreover, between 2011 and 2015, Bats engaged in a series of mergers and acquisitions that propelled its global presence.

In 2011, the acquisition of Chi-X Europe made Bats the largest stock exchange in Europe. This move was followed by the merger with Direct Edge in 2014, adding the EDGA and EDGX exchanges to its portfolio. In 2015, Bats acquired Hotspot, an electronic communication network (ECN), which enhanced its ability to provide institutional investors with spot trading, swap execution, and forward trading services.

Challenges Faced by Bats

While Bats Global Markets enjoyed impressive success, it was not without its fair share of challenges. In 2012, the company embarked on an initial public offering (IPO) with shares being offered on its own exchange. However, a critical technical issue led to a dramatic plummet in its IPO price, from $16 per share to just $0.04 a share, causing the IPO to be abandoned.

In 2013, another technical error resulted in hundreds of thousands of trades executing at prices lower than the best bid and offer, affecting investors, particularly those involved in short selling. This error had ramifications extending back four years.

The Acquisition by Cboe Options Exchange

In 2017, a pivotal moment in the history of Bats Global Markets occurred when Cboe, the owner of the Cboe Options Exchange and Cboe Futures Exchange (CFE), extended an offer to acquire Bats. This acquisition marked a significant expansion for Cboe, allowing it to venture into European markets and broaden its offerings to encompass foreign exchange and ETFs.

With this acquisition, Cboe's operational scope expanded considerably. Today, it manages four U.S. options markets, the Cboe Futures Exchange, a European equities market, four U.S. equities markets, and a foreign exchange market. Notably, three of the exchanges under Cboe's purview migrated to the Bats Global Markets platform, emphasizing the integration and synergy between the two entities.

In summary, Bats Global Markets, born from the innovative vision of BATS, grew into a significant player in the global financial landscape. Its acquisition by Cboe marked a strategic move to further expand its presence and offerings, showcasing the dynamic nature of financial markets and the continuous evolution of trading platforms to meet the demands of investors worldwide.

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