Table of Contents
Table of Contents

Better Alternative Trading System (BATS): Definition, Acquisition

By
Will Kenton
Full Bio
Will Kenton is an expert on the economy and investing laws and regulations. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU.
Learn about our editorial policies
Updated August 13, 2022
Reviewed by
Thomas J. Catalano
Thomas Catalano
Reviewed by Thomas J. Catalano
Full Bio

Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.

Learn about our Financial Review Board
Fact checked by
Yarilet Perez
Yarilet Perez
Fact checked by Yarilet Perez
Full Bio

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Learn about our editorial policies

What Is Bats Global Markets?

Bats Global Markets was a U.S.-based exchange that listed several different types of investments, including equities, options, and foreign exchange. It was founded in 2005 and was acquired by Cboe Options Exchange (Cboe) in 2017. Prior to being acquired, Bats Global Market was one of the largest U.S. exchanges and well known for its services to broker-dealers as well as retail and institutional investors.

Key Takeaways

  • Better Alternative Trading Systems was rebranded to Bats Global Markets in 2008 when the exchange made a foray into European markets.
  • CBOE acquired Bats in 2017 and migrated three of its exchanges to the Bats Global Markets platform.
  • Prior to the acquisition, Bats had become one of the largest exchanges in the world with listings in stocks, options, ETFs, and foreign exchange.

Understanding BATS

Bats Global Markets was previously known as Better Alternative Trading System (BATS) and was initially branded as an alternative trading platform, marketing itself to investors as a company that was more innovative than established exchanges. When it entered the European market in 2008, the company was rebranded as Bats Global Markets.

As an exchange, Bats grew into the main competitor to the New York Stock Exchange (NYSE) and Nasdaq, both of which handled a greater amount of equities when ranked by market capitalization. In 2016, Bats had become the second-largest U.S. equity exchange by market share and was the largest exchange-traded fund (ETF) exchange.

In the United States, its BZX Exchange became a registered exchange in 2008, and its BYX Exchange was launched in 2010. Between 2011 and 2015, Bats merged with and acquired several exchanges. In 2011, it acquired Chi-X Europe, making it the largest stock exchange in Europe. In 2014, a merger with Direct Edge added the EDGA and EDGX exchanges. In 2015, Bats acquired Hotspot, an electronic communication network (ECN), allowing institutional investors spot trading, swap execution, and forward trading services.

BATS vs. Cboe

BATS experienced several notable technical hurdles over the years. The company sought to go public in an initial public offering in 2012, with shares being offered on its own exchange. This effort was scrapped when a serious technical issue resulted in its IPO price tumbling from $16 per share to $0.04 a share.

In 2013, the company indicated that a technical error led to hundreds of thousands of trades executing at prices lower than the best bid and offer, which also affected investors who were selling shares short. The error affected trades going back four years.

Cboe, the owner of the Cboe Options Exchange and Cboe Futures Exchange (CFE), made an offer to acquire Bats Global Markets in 2017. The acquisition allowed Cboe to expand into Europe and increase its offerings to include foreign exchange and ETFs. Cboe now operates four U.S. options markets, Cboe Futures Exchange, a European equities market, four U.S. equities markets, and a foreign exchange market. Three of the exchanges that Cboe operated prior to acquiring Bats migrated to the Bats trading platform.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. U.S. Securities and Exchange Commission. "Form S-1 Registration Statement: Bats Global Markets, Inc.," Page 1.

  2. Cboe. "CBOE Holdings Announces Close of Acquisition of Bats Global Markets."

  3. U.S. Securities and Exchange Commission. "Form S-1 Registration: Bats Global Markets, Inc.," Page 52.

  4. Cboe. "Overview," Page 2.

  5. Cboe. "Bats Reports Strong Market Share Across All Markets in July; Remains #1 in U.S. ETF Trading, #1 Pan-European Stock Market," Page 1.

  6. U.S. Securities and Exchange Commission. "Form S-1 Registration Statement: Bats Global Markets, Inc.," Page 2.

  7. Cboe. "Bats Global Markets Completes Acquisition of Chi-X Europe."

  8. U.S. Securities and Exchange Commission. "Self-Regulatory Organizations; BATS Exchange, Inc.; BATS-Y Exchange, Inc.; Order Granting Approval of Proposed Rule Change in Connection With the Proposed Business Combination Involving BATS Global Markets, Inc. and Direct Edge Holdings LLC."

  9. Cboe. "BATS Agrees To Acquire Hotspot FX Market."

  10. PR Newswire. "BATS Global Markets Withdraws Initial Public Offering."

  11. Bloomberg. "Bats Says System Errors Cause Pricing Problems."

  12. Cboe. "Markets."

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Service
Name
Description