BATS Swings For The Fences
Liz Moyer, 05.31.07, 3:45 PM ET
BATS Trading, the upstart Kansas City, Mo., electronic communications network, continues to make waves as much bigger rivals like Nasdaq hunt down merger targets abroad.
On Thursday, BATS announced it had completed yet another round of financing, this time drawing Citigroup (nyse: C - news - people ) into its growing roster of Wall Street investors. It raised $45 million this time, including unquantified investments from Citi and several of its previous investors, including Lehman Brothers (nyse: LEH - news - people ), Merrill Lynch (nyse: MER - news - people ), Morgan Stanley (nyse: MS - news - people ), Credit Suisse (nyse: CS - news - people ) and Lime Brokerage.
The added backing from the biggest brokerage firms comes as BATS abandons plans to buy a regional exchange like the National or Chicago stock exchanges. Instead, Chief Executive David Cummings has asked the Securities and Exchange Commission to review its application for exchange status.
BATS has "decided to stop talking about mergers with the regionals and remain independent," Cummings said in a recent e-mail. "With our growing volumes and reduced cost of selling receivables, we are approaching small profitability," he added. "It is nice to not have the pressure to do deals just to get our short-term stock price up."
He, of course, is referring to Nasdaq's (nasdaq: NDAQ - news - people ) $3.7 billion deal last week to acquire OMX, the company that runs the Nordic and Baltic stock exchanges, just months after being jilted in its attempt to acquire the much bigger and higher-profile London Stock Exchange.
Cummings, a former wheat trader on the Kansas City exchange, formed BATS nearly two years ago after he noticed a void of alternative electronic trading sites that could compete with Nasdaq, and to a lesser extent NYSE Euronext (nyse: NYX - news - people ), and hold down trading costs for brokers.
Wall Street has been only too eager to help him. "We are pleased to invest in BATS Trading, which complements our in-house electronic execution capabilities as well as our ongoing strategic and financial investments in this space," says James Pak, who heads up market structure investments at Citi. |
