Bats unveils MiFID II compliant block trading platform

Chief executive officer at Bats Europe, Mark Hemsley, discusses the venue’s new block trading platform.

Bats Europe is to launch a MiFID II compliant, equities block-trading platform, which incorporates technology from BIDS Trading in the US.

Bats LIS (large-in-scale) is an indication of interest (IOI), negotiation and execution platform that allows participants to negotiate large blocks in European equities without revealing intentions to the wider market.

Mark Hemsley, chief executive officer at Bats Europe, told The Trade the platform combines buy- and sell-side activity, with the buy-side controlling their indications of interest up until they wish to firm-up and handover to their designated sell-side broker who executes the block trade.

“We like that feature - it means that the buy-side that do not have direct access to the system can be represented by the sell-side” Hemsley said.

BIDS Trading - a broker-dealer based in the US – will employ its technology BIDS Trader, to integrate users existing order management systems (OMS) and execution management systems (EMS) to Bats LIS.

Explaining the software, BIDS Trading chief executive officer, Tim Mahoney, said: “At a basic level, BIDS Trader is a matching engine, matching buy and sell interests – we’re open to both buy- and sell-side, manual and automated users, allowing interaction to occur in one place.”

Hemsley said integrating OMS and EMS can be time consuming and costly, but BIDS Trader has many features which allow an easy integration for firms.

“BIDS Trader already has a large number of OMS integrations in place. Some of the global buy-side firms are using OMS software that is already interfaced to BIDS Trader.” 

Bats will also enlist BIDS Trading’s score cards, which Hemsley told The Trade was another feature which led to its use for the Bats LIS platform.

He said: “We looked at how the [BIDS Trading] system works and we liked how the buy- and sell-side could interact with each other within the system’s facilities, like score cards which look to reward those who firm up regularly and quickly.”

BIDS Trading’s Mahoney added “BIDS has traded more block trades in the US than any other alternative trading system (ATS), but we are not global so it’s a unique opportunity to collaborate with Bats.”

MiFID II – due to be implemented by 3 January 2018 – will see large-in-scale trading benefit from waivers enabling participants to negotiate without pre-trade transparency.

Hemsley said the Bats LIS platform is completely compliant with MiFID and MiFID II, adding that Bats recognises the industry’s need to have solutions now.

Mahoney added: “The European regulation is fascinating, and with large-in-scale waivers under MiFID II, we could see an uptake in block trading.”

Bats LIS will be gradually rolled out by the end of this year, after regulatory approval.