BATS Global Markets, the US-based market operator, has received final clearance from the UK’s Competition Commission to purchase multlateral trading facility (MTF) Chi-X Europe.
The clearance means BATS can now move ahead with plans to merge its European MTF with Chi-X Europe, creating the largest equity trading venue in the region.
An integration timetable is due to be finalised in the coming weeks. It is widely anticipated Chi-X Europe will move over to BATS Europe’s technology platform early next year.
BATS Global Markets entered a definitive agreement to buy Chi-X Europe in February 2011 and the deal was referred to the Competition Commission in June.
The combined firm will retain BATS’ and Chi-X Europe’s existing lit and dark order books, allowing the combined firm to offer differentiated fee tariffs and minimise the potential for leakage of market share to competitors.
According to figures from Thomson Reuters, BATS Europe (4.1%) and Chi-X Europe (19.8%) would have had a combined pan-European equity trading market share of 23.9% in October, ahead of second-placed Deutsche Börse, which commanded a 13.5% share of European trading last month.
The new firm will be led by current BATS Europe CEO Mark Hemsley, with Chi-X Europe chief Alasdair Haynes due to step down after a transition period.
Under the terms of the deal – as stated in BATS Global Markets’ US IPO filing in early May – Chi-X Europe’s shareholders will receive approximately 4.4 million newly-issued shares of BATS Global Markets stock and approximately US$36 million in cash. BATS Global Markets could also pay up to an additional US$65 million in cash to Chi-X Europe’s shareholders in the third quarter of 2012, if certain market share benchmarks are met.
“We appreciate the Competition Commission’s attention to this matter and we are pleased that their formal findings support those in the provisional report,” said Joe Ratterman, chairman and chief executive of BATS Global Markets. “We will now focus on completing the combination of BATS Europe and Chi-X Europe to create an even more formidable competitor in pan-European securities trading, offering greater market efficiencies for the entire investing community.”