Bats IPO Off And Running

The stock exchange committed to becoming the hub for ETFs is now a public company.

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Reviewed by: Cinthia Murphy
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Edited by: Cinthia Murphy
Bats Global Markets, the Kansas City, Missouri-based exchange operator that owns ETF.com, went public this morning in the biggest initial public offering so far this year.

Going into it, the IPO was oversubscribed at least by 20 times the number of shares being made available. Pricing this morning at $22.88 a share, Bats’ value is $2.2 billion.

The exchange had tried to go public before, in 2012, when it was seeking to raise about $760 million with an initial share price of $16. But that IPO was called off due to a software glitch.

Bats Targeting ETFs

But today, the IPO went off without a glitch. Bats' shares were priced pre-IPO at $19 a share Thursday.

For the ETF industry, this IPO is particularly interesting, because Bats is the largest ETF listings exchange.

In recent months, the company rolled out an incentive program that pays ETF issuers to list funds on its board. The payment, which is based on consolidated average daily volume exceeding 1 million shares a day, ranges from $3,000 to $400,000 a year per ETF. And the incentive grows as volume grows.

Since its inception in October 2015, the Bats ETF Marketplace program has seen a growing number of ETF listings coming to Bats from issuers such as iShares, WisdomTree and Elkhorn. Today some 74 ETFs call Bats’ board home in the US versus 29 a year ago. Nine are listed in Europe.

Most Liquid Exchange For ETFs

Aside from a growing number of listings, Bats commands nearly half of all ETF trading taking place on exchanges, making it the most liquid exchange for ETFs.

As an exchange, Bats earns revenue from transaction fees associated with trading, and it executes trades valued at roughly $130 billion a day across markets in the U.S. and Europe in equities, trade reporting, options and foreign exchange. Total ETF assets listed on the exchange, though, remain a drop in the bucket compared with NYSE’s nearly $2 trillion in U.S.-listed ETF assets, but they are growing.

Bats also recently acquired ETF.com in a strategic move to expand its reach within the advisory community.

Contact Cinthia Murphy at [email protected].

Cinthia Murphy is head of digital experience, advocating for the user in all that etf.com does. She previously served as managing editor and writer for etf.com, specializing in ETF content and multimedia. Cinthia’s experience includes time at Dow Jones and former BridgeNews, covering commodity futures markets in Chicago and Brazil equities in Sao Paulo. She has a bachelor’s degree in journalism from the University of Missouri-Columbia.