BATS Trading Inc., the largest U.S. electronic communications network, received SEC approval today to become the 11th U.S. stock exchange, BATS Vice President Randy Williams said.
The biggest advantage for us is that the exchange status puts us on the same plane as NYSE and Nasdaq. We no longer need to put up quotes on another exchange. Stripping that latency will make a big difference for us in terms of speed. We should build up our market share quickly, Mr. Williams said. He added that he expects BATS to operate as an exchange within two months.
ECNs must display their orders on exchanges, which involves a small time lag that puts them at a disadvantage vs. regulated markets in a world of subsecond execution.
BATS, which already handles about 10% of U.S. equity trading, is the first ECN whose exchange application was approved by the SEC. Chicago-based Archipelago ECN became an exchange in 2005 through its acquisition of the Pacific Stock Exchange and is now owned by NYSE Euronext.