| NEW YORK, April 18
NEW YORK, April 18 Equities exchange operator
BATS Global Markets will start charging U.S. clients for access
to its proprietary market data as of July 1, a move that will
bring in new, steady revenues as a multi-year market-wide slump
in trading volumes continues.
BATS, which was the No. 3 U.S. equities exchange in 2012,
will introduce monthly fees for depth of book data, as well as
top of book and last sales feeds for its two U.S. exchanges
(BATS BZX and BATS BYX), it said in a note to clients.
BATS Chi-X Europe depth of book feeds sourced from the
United States will also be subject to fees, BATS said in the
note. (Link to the fee schedule:)
BATS spokesman Randy Williams declined to comment.
Since its launch as an electronic communications network
(ECN) in 2005, the Lenexa, Kansas-based company has grown to
capture about 12 percent to 13 percent of U.S. stock trading
volume and a smaller amount of options trading. BATS gained
exchange status in 2008.
Competing exchanges run by NYSE Euronext, Nasdaq OMX
Group, and Direct Edge all charge fees for their data,
which provides a steadier source of income than trading fees.
About 15 percent of NYSE's $2.3 billion in revenues last year
came from market data. About 21 percent of Nasdaq's $1.7 billion
in revenues was derived from its data products.
Part of the reason BATS was able to quickly gain market
share against the New York Stock Exchange and the Nasdaq was
that it was giving its proprietary data away for free, said Paul
Rowady, an analyst at research and advisory firm TABB Group.
"This is a significant departure from their roots and it
speaks volumes about the exchange environment," he said.
Exchanges have been looking for ways to increase their
revenues as trading volumes remain low, while costs related to
technology and regulatory compliance have been rising, said Bill
Karsh, a special adviser to National Stock Exchange, and a
former head of Direct Edge.
"Everything is going higher except for volumes. It's harder
and harder to keep up," he said.
BATS said in a regulatory filing last year that it was
exploring the idea of charging for market data.
The filing was in anticipation of BATS's initial public
offering on its own exchange. But the market debut, on March 23,
2012, was marred by a technology glitch, causing BATS to take
the extremely rare step of withdrawing its IPO.
The additional revenue from its proprietary data could make
BATS more appealing to investors if it tries to go public again,
The exchange operator plans to charge companies $1,000 a
month for internal usage of depth of book data from the BZX
exchange and $500 a month for depth of book data from the BYX
exchange. For top of book and last sale data, the cost will be
$500 a month on both BZX and BYX.
Firms that distribute the depth of book data externally will
have to pay $5,000 a month for the BZX data and $2,500 for the
BYX data. Distribution of the top of book and last sale data
will be $2,500 a month each of the two exchanges.
BATS began charging its European clients fees for its
proprietary data last year.