Exchange operators BATS Global Markets and Direct Edge Holdings will merge, forming the second largest stock exchange operator, as measured by market share, after NYSE Euronext.
Current BATS chief executive officer Joe Ratterman will remain in the same role and current Direct Edge chief executive Bill O’Brien will be president. Bryan Harkins of Direct Edge will join the combined company as an integral member of the senior executive team, according to a statement
The company will remain headquartered in Kansas City under the BATS Global Markets enterprise. The company will continue to run all four exchanges – the BATS BZX and BYX Exchanges and the Direct Edge EDGX and EDGA Exchanges. They will run exclusively on the proprietary BATS technology.
Financial terms were not disclosed. The transaction is expected to close in the first half of 2014, subject to regulatory approvals.
The deal comes as U.S. equity volume has falled by about a one-thirs since 2009 to 6.3 billion shares.
“This agreement is an important milestone for the U.S. equities market and other markets around the globe as it will combine two organizations that have been innovative in creating a more competitive marketplace to benefit all investors,” Ratterman said in the statement.
O’Brien added: “Direct Edge and BATS were both founded on a commitment to create an optimal trading experience for a diverse member base, from retail investors to broker-dealers to institutions. Together, the best of both organizations will work to further improve how the world trades, consumes market data, and accesses capital markets.”
The combined company will be headquartered in the Kansas City, Mo., area with additional offices in Jersey City, N.J., New York and London.
BATS was advised by Broadhaven Capital Partners on the transaction and Direct Edge was advised by BofA Merrill Lynch and Evercore Partners.
