Chi-X Europe
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BATS Chi-X Europe is a
London London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...
-based, order-driven pan-European equity exchange that has been a subsidiary of BATS Global Markets since 2011. It is a low latency, low cost alternative to exchange traded equities and
exchange-traded fund An exchange-traded fund (ETF) is a type of investment fund that is also an exchange-traded product, i.e., it is traded on stock exchanges. ETFs own financial assets such as stocks, bonds, currencies, debts, futures contracts, and/or comm ...
s (ETFs) that are listed on primary exchanges such as the
London Stock Exchange The London Stock Exchange (LSE) is a stock exchange based in London, England. the total market value of all companies trading on the LSE stood at US$3.42 trillion. Its current premises are situated in Paternoster Square close to St Paul's Cath ...
,
Frankfurt Stock Exchange The Frankfurt Stock Exchange (, former German name: , ''FWB'') is the world's 3rd oldest and 12th largest stock exchange by market capitalization. It has operations from 8:00 am to 10:00 pm ( German time). Organisation Located in Frankfurt, ...
,
Euronext Euronext N.V. (short for European New Exchange Technology) is a European bourse that provides trading and post-trade services for a range of financial instruments. Traded assets include regulated equities, exchange-traded funds (ETF), warrant ...
and OMX. Previously a
multilateral trading facility A multilateral trading facility (MTF) is a European Union regulatory term for a self-regulated financial trading venue. These are alternatives to the traditional stock exchanges where a market is made in securities, typically using electronic ...
(MTF), BATS Chi-X Europe received Recognised Investment Exchange (RIE) status from the Financial Conduct Authority (FCA) in May 2013, and was from then authorised to operate a Regulated Market for primary listings alongside its existing business. Initially two separate entities, Chi-X Europe was the first pan-European equities exchange to launch in 2007; BATS Europe was launched in 2008. In February 2011, BATS Global Markets agreed to buy Chi-X Europe for $300 million. The deal was referred by the
Office of Fair Trading The Office of Fair Trading (OFT) was a non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforced both consumer protection and competition law, acting as the United Kingdom's economi ...
to the
Competition Commission The Competition Commission was a non-departmental public body responsible for investigating mergers, markets and other enquiries related to regulated industries under competition law in the United Kingdom. It was a competition regulator under t ...
in June 2011 for further investigation to "determine whether a substantial lessening of competition is probable as a result of the anticipated merger." However, the Competition Commission approved the transaction in late November 2011, leading to BATS closing the deal on 30 November 2011.


History


Chi-X Europe

Chi-X Europe was established in 2007 by
Instinet Instinet Incorporated is an institutional, agency-model broker that also serves as the independent equity trading arm of its parent, Nomura Group. It executes trades for asset management firms, hedge funds, insurance companies, mutual funds a ...
. Ownership in Chi-X Europe was eventually broadened to include a consortium of major global financial institutions including
BNP Paribas BNP Paribas (; sometimes referred to as BNPP or BNP) is a French multinational universal bank and financial services holding company headquartered in Paris. It was founded in 2000 from the merger of two of France's foremost financial instituti ...
,
Citadel A citadel is the most fortified area of a town or city. It may be a castle, fortress, or fortified center. The term is a diminutive of ''city'', meaning "little city", because it is a smaller part of the city of which it is the defensive core. ...
,
Citigroup Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services company based in New York City. The company was formed in 1998 by the merger of Citicorp, t ...
,
Credit Suisse Credit Suisse Group AG (, ) was a global Investment banking, investment bank and financial services firm founded and based in Switzerland. According to UBS, eventually Credit Suisse was to be fully integrated into UBS. While the integration ...
,
Fortis Fortis may refer to: Business * Fortis (Swiss watchmaker), a Swiss watch company * Fortis Films, an American film and television production company founded by actress and producer Sandra Bullock * Fortis Healthcare, a chain of hospitals in ...
, GETCO Europe Ltd,
Goldman Sachs The Goldman Sachs Group, Inc. ( ) is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many internationa ...
,
Merrill Lynch Merrill Lynch, Pierce, Fenner & Smith Incorporated, doing business as Merrill, and previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investm ...
,
Morgan Stanley Morgan Stanley is an American multinational investment bank and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in 42 countries and more than 80,000 employees, the firm's clients in ...
, Optiver,
Société Générale Société Générale S.A. (), colloquially known in English-speaking countries as SocGen (), is a French multinational universal bank and financial services company founded in 1864. It is registered in downtown Paris and headquartered nearby i ...
and
UBS UBS Group AG (stylized simply as UBS) is a multinational investment bank and financial services firm founded and based in Switzerland, with headquarters in both Zurich and Basel. It holds a strong foothold in all major financial centres as the ...
. However, on 1 December 2011, BATS Global Markets acquired the firm from the consortium. When it launched, Chi-X Europe was the first multilateral trading facility that launched in anticipation of the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
's November 2007
Markets in Financial Instruments Directive Markets in Financial Instruments Directive 20142014/65/EU commonly known as MiFID 2), is a directive of the European Union (EU). Together with Regulation No 600/2014 it provides a legal framework for securities markets, investment intermediari ...
(MiFID), which paved the way for the introduction of alternative trading venues in Europe. In February 2009, Peter Randall, who took over CEO duties from Chairman Tony Mackay shortly after launch, quit Chi-X Europe unexpectedly and was replaced by Alasdair Haynes in December 2009. Randall reportedly left for "personal reasons".
Citadel LLC Citadel LLC (formerly known as Citadel Investment Group, LLC) is an American multinational hedge fund and financial services company. Founded in 1990 by Kenneth Griffin, it has more than $65 billion in assets under management . The company has ...
named Randall as chief executive of Equiduct Systems on 18 December 2009. Also in February 2009, ''
The Wall Street Journal ''The Wall Street Journal'' (''WSJ''), also referred to simply as the ''Journal,'' is an American newspaper based in New York City. The newspaper provides extensive coverage of news, especially business and finance. It operates on a subscriptio ...
'' reported that "Chi-X performed 9.1% of trades in the 10 largest European markets, including 15% of trades in
FTSE 100 The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" , is the United Kingdom's best-known stock market index of the 100 most market capitalisation, highly capitalised ...
stocks" and also that "In London, Europe's main equity center, Chi-X Europe is now trading nearly 15% of U.K. equities, a performance that has contributed to the London Stock Exchange's market share falling below 75% for the first time." In February 2010, Chi-X Europe's
chief operating officer A chief operating officer (COO), also called chief operations officer, is an executive in charge of the daily operations of an organization (i.e. personnel, resources, and logistics). COOs are usually second-in-command immediately after the C ...
Hirander Misra suddenly quit the firm to "pursue other interests". Misra had helped guide the company along with Randall, from its start until it became the second-largest market by share. Despite the management turnover, Chi-X Europe continued to grow, steadily increasing its market share and regularly introducing new products, such as the Chi-Delta dark book it introduced in April 2009. By mid-2010, the company had been profitable for several quarters and had reached a pan-European equities market share of nearly 20%, leading to an acquisition offer.


BATS Europe

BATS Trading Limited (BATS Europe) was established in 2008 by U.S. exchange operator BATS Global Markets. In April 2008, BATS named Mark Hemsley as chief executive officer and Paul O’Donnell as chief operating officer. BATS Europe was launched later that year on 31 October 2008. By 2010, BATS Europe was the second-largest MTF, behind Chi-X Europe, leading to it acquiring the other company.


Combined firm

In April 2011, BATS Global Markets confirmed that Mark Hemsley, CEO of BATS Europe, will be appointed CEO of the combined entity following BATS' acquisition of Chi-X Europe. The joint entity, BATS Chi-X Europe, covered 1,800 stocks, in 25 indices and 15 European countries, as of early 2012. Between January and April 2012, BATS Chi-X Europe was the largest pan-European equities exchange in terms of value traded. In December 2011, BATS Chi-X Europe had a pan-European marketshare of more than 25% and 24.6% in April 2012. By April 2012 the technology integration between the two platforms was complete and Chi-X Europe customers were migrated onto the BATS Europe platform. In March 2013, after Europe's two largest cash equities clearing providers unveiled plans to merge, BATS Chi-X Europe announced it would take a 25% stake in the new entity, to be called EuroCCP. During June 2016, it announced it was to offer a free UK index series with real-time information to private and retail investors which included FTSE 100 rival, the Bats UK 100.


Regulatory environment

Chi-X Europe is authorised by the
Financial Conduct Authority The Financial Conduct Authority (FCA) is a financial regulatory body in the United Kingdom. It operates independently of the UK Government and is financed by charging fees to members of the financial services industry. The FCA regulates financi ...
(FCA) to operate a multilateral trading facility (MTF), as defined under
MiFID Markets in Financial Instruments Directive 20142014/65/EU commonly known as MiFID 2), is a directive of the European Union (EU). Together with Regulation No 600/2014 it provides a legal framework for securities markets, investment intermediari ...
, for the trading of pan-European securities. Chi-X Europe meets the same level of regulatory standards as traditional exchanges and receives the same level of supervision as explained by the FCA: "we aim to ensure that Multilateral Trading Facilities (MTFs) with a similar market impact or market share as Regulated Markets (i.e. exchanges) receive the same level of supervision as those markets, even though MTFs sit under a slightly different legal regulatory regime."


See also

*
London International Financial Futures and Options Exchange The London International Financial Futures and Options Exchange (LIFFE, pronounced 'life') was a futures exchange based in London. In 2014, following a series of takeovers, LIFFE became part of Intercontinental Exchange, and was renamed IC ...
*
Euronext Euronext N.V. (short for European New Exchange Technology) is a European bourse that provides trading and post-trade services for a range of financial instruments. Traded assets include regulated equities, exchange-traded funds (ETF), warrant ...
*
NYSE Euronext NYSE Euronext, Inc. was a Transatlantic relations, transatlantic Multinational corporation, multinational financial services corporation that operated multiple Stock exchange, securities exchanges, including the New York Stock Exchange, Euronext ...


References


External links

*
BATS Global Markets
{{Stock market Stock exchanges in the United Kingdom Financial services companies based in London