BATS Global Markets, the third-largest U.S. exchange operator, filed on Friday for an IPO amid a frenzy of consolidation across the industry, including the acquisition of bigger rival NYSE Euronext .
German exchange operator Deutsche Boerse is battling a joint NASDAQ OMX Group and ICE hostile bid for NYSE Euronext. Separately, Canada's TMX Group is tying up with the London Stock Exchange .
Investor appetite for the IPO will be strong. BATS has come out of nowhere in just a few years to have a significant market share, said Jay Ritter, professor of finance at the University of Florida.
BATS, which owns and operates the BATS trading platform, was launched in 2005 as an alternative to the New York Stock Exchange and Nasdaq, according to the filing.
Last year, BATS Global's U.S. equities segment, its largest business in terms of revenue, had an average daily volume of about $1 billion worth of shares, giving it about 10.5 percent market share, the company said in its preliminary filing.
BATS EYES LISTINGS
A Nasdaq-NYSE Euronext combination would create a stock-trading powerhouse in the United States and Europe that would also have a monopoly in listing U.S. public companies.
However, BATS may also be eyeing opportunities for itself if a Nasdaq and NYSE deal does materialize and win regulatory approval.
There's an opportunity where maybe the regulators wouldn't allow all the listings to go into a single company, Ken Conklin, a senior vice president and head of business development at BATS, said in an interview last month.
In March, Reuters reported that BATS Global Markets planned to list U.S. public stocks by the year-end, opening the door for companies to float their shares somewhere other than on the Big Board or Nasdaq for the first time in years.
Kansas City-based BATS Global, which ranks behind only NYSE Euronext and NASDAQ OMX Group in the United States, is not planning to target specific sectors or regions for listings, although many expect it to offer a home for smaller-capitalized firms.
Upstarts like BATS have eaten deep into the market share of the two traditional venues, forcing them in the last decade to upgrade and embrace electronic trading -- and seek mergers.
The traditional exchanges have declining market share due to new entrants like BATS, Ritter said.
In February, BATS Global Markets said it was taking over peer Chi-X Europe to create the largest pan-European trading venue.
BATS, owned by many of the world's largest banks including JPMorgan Chase & Co and Credit Suisse , and trading firms such as Lime Brokerage, plans to list its common stock on BATS Exchange Inc under the BATS symbol.
Some shares will be issued and sold by BATS, and a portion will be sold by some of the stockholders.
BATS Global posted net income of $19.8 million last year on revenue of $835 million. It said in its filing it intends to use the IPO proceeds for general corporate purposes.
Morgan Stanley, Citi , and Credit Suisse will underwrite the IPO, the company said in the filing, which did not reveal how many shares it planned to sell or their expected price.
BATS Global's filing said it planned to raise up to $100 million. However, the amount a company says it plans to raise in its initial IPO filings is just used to calculate registration fees. The final size of the IPO could be different.
(Reporting by Tanya Agrawal and Brenton Cordeiro in Bangalore; Editing by Vyas Mohan and Ian Geoghegan)