The Securities and Exchange Commission has approved the merger of US equity market operators BATS Global Markets and Direct Edge and the combined entity is expected to challenge the New York Stock Exchange as the top US exchange by market share.
The merger, which will see two order books operated by BATS and two by Direct Edge fall under the BATS brand, was initially proposed in August. The two companies agreed to maintain all four order books, which have grown to a stable 20% share of trading in US stocks. The first day of trading as a combined entity is expected on 3 February, sources close to the matter have said.
In a statement, BATS said it would focus on innovating trading services for customers.
“With the final regulatory approval received, we are focused on closing the merger during the current quarter and beginning the integration of our two highly complementary companies,” said Joe Ratterman, CEO of BATS Global Markets. William O’Brien, CEO of Direct Edge, will become president of BATS.
The two order books operated by Direct Edge will eventually transition to BATS’ exchange technology, the firm said.
In December, the four order books that will come under the BATS brand reached a combined total of 21.85% market share with US$899.1 billion in equities traded, up from 21.78% in November.
Meanwhile, NYSE’s two markets traded US$1.043 trillion, giving the exchange group a market share of 25.45% of US equities, while Nasdaq attracted 17.21%.