The financial pressure on BATS Europe to complete its impending merger with rival multilateral trading facility (MTF) Chi-X Europe was thrown into sharp relief following publication of its trading activity for January.
BATS Europe reported a daily turnover of €2.732 billion in January 2011, up 73% on the same month last year. However, it still faces a shortfall of €1.268 billion in daily turnover before it would be considered profitable, according to figures provided by parent company BATS Global Market's vice president of global communications, Randy Williams, in August 2010 when he said it needed “around €4 billion worth of turnover in Europe per day to be consistently profitable”.
Its parent company, BATS Global Markets, which also operates US trading venues BATS BZX Exchange and BATS BYX Exchange, entered into exclusive talks to buy Chi-X Europe on 22 December 2010.
The deal reportedly values Chi-X Europe at around $300 million. Compared to BATS Europe's breakeven of €88 billion in monthly turnover, Chi-X Europe's is estimated at around €100 billion, but the MTF averaged €130 billion per month last year and achieved a 2010 pan-European market share of 16.6%. By contrast, BATS Europe averaged €31.506 billion a month in 2010, rising to €58.650 billion in January 2011.
By its own figures, BATS Europe recorded new consolidated monthly market share records in London's FTSE 100 (12.0%), the Swiss SMI (10.1%), Amsterdam's AEX (7.2%), Frankfurt's MDAX (5.9%), Brussels' BEL20 (5.9%), Paris' CACNext20 (5.3%) and the STOXX Europe 50 (7.9%) indices, with 6.8% share of volume in Europe overall.
A merged Chi-X Europe/BATS Europe entity would be expected to need a pan-European market share of around 22-23% to achieve profitability.