Saturday, April 11, 2015

BATS Exclusive Listing Plan on to Something, or Just Batty?

By Mark S. Nelson, J.D.

Newly installed BATS CEO Chris Concannon said this week he is ready to push for a rule change that would let BATS keep thinly-traded stocks off the company’s exchange. The “BATS Exclusive Listing Proposal” (as Concannon calls it) would apply to illiquid stocks that have their primary listing on another U.S. exchange. Taking this approach, he said, would “concentrate” liquidity for these stocks on just one exchange.

Concannon said BATS plans to submit a rule change proposal to the SEC later this month seeking the agency’s blessing to move ahead with exclusive listings for some stocks. He said the rule may help to de-fragment trading volumes for these stocks. The rule will define what an illiquid stock is, but Concannon said BATS will not press for a trade-at rule. Still, the proposal will need to be examined carefully to see how it would “graduate” stocks that become more liquid from a single to a multiple-exchange environment.

According to Concannon, the forthcoming proposal is in line with BATS’s prior efforts to change how exchanges deal with access fees and rebates. He cast BATS as a “problem solver” within its industry, although he reiterated that the exclusive listings proposal would only “help” fix existing problems.

BATS announced the appointment of Concannon to the CEO post in February. He takes over for Joe Ratterman, who will succeed Paul Atkins as Chairman of BATS’s board of directors.