A New Rival for NYSE and Nasdaq: BATS

In January, iShares launched a handful of small foreign exchange-traded funds that made few waves in the crowded ETF world. But they did serve a larger purpose in the relatively narrow world of stock exchanges.

On Jan. 24, the iShares MSCI Norway Capped Investable Market Index Fund (BATS:ENOR) became the first primary listing on the Lenexa, Kan.-based BATS BZX Exchange — a new primary listings venue that gained SEC approval in late 2011.

The BATS BZX Exchange will function as an alternative to the New York Stock Exchange and the Nasdaq. BZX will be able to handle initial public offerings, and existing stocks will be able to transfer listings to or dual-list on the exchange.

Everyday investors should be able to trade BATS BZX-listed securities through their brokerage accounts much like NYSE and Nasdaq listings, and because it’s a primary U.S. listing, trades for BZX-listed securities shouldn’t incur additional fees like those charged for foreign-listed stocks. However, representatives at Charles Schwab (NASDAQ:SCHW) and ETrade (NASDAQ:ETFC) were not immediately able to confirm this, so investors should talk to their brokerage firms before attempting to trade BZX-listed securities.

Much like the other exchanges, the BZX has rules governing companies that list there, such as requiring its members to disclose quarterly financial reports.

BATS hopes to lure companies with its Competitive Liquidity Provider initiative, a rewards-based quote program meant to encourage liquidity. Through the BATS CLP program, market makers compete for a daily reward by posting competitive quotes in a stock or exchange-traded product. CLPs are rewarded based on their continuous daily quoted size at the national best bid/offer in the securities for which they are registered CLPs.

“We understand this is a tough market to break into, with the incumbent exchanges having a long history and strong brand recognition,” BATS Chairman and CEO Joe Ratterman said in a December release. “At the same time, we don’t believe the issuer community is being served as well as they can be, and our history of innovation will likely be welcomed in an area that hasn’t been seriously challenged for dozens of years. We look forward to working directly with issuers to meet their specific needs and growing our listings business one issuer at a time.”

In addition to the Norway ETF, iShares launched seven other funds on the BATS BZX Exchange:

  • iShares MSCI Australia Small Cap Index Fund (BATS:EWAS)
  • iShares MSCI Canada Small Cap Index Fund (BATS:EWCS)
  • iShares MSCI Denmark Capped Investable Market Index Fund (BATS:EDEN)
  • iShares MSCI Finland Capped Investable Market Index Fund (BATS:EFNL)
  • iShares MSCI Germany Small Cap Index Fund (BATS:EWGS)
  • iShares MSCI United Kingdom Small Cap Index Fund (BATS:EWUS)
  • iShares MSCI India Index Fund (BATS:INDA)

BATS, which stands for Better Alternative Trading System, was founded in 2005 and operates several other exchanges, including the smaller BYX U.S. equity exchange and the BATS Options market in the U.S., as well as the BATS Europe and Chi-X Europe exchanges. The company filed for a $100 million IPO in May, and currently is in the IPO quiet period.

Kyle Woodley is the assistant editor of InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2012/02/bats-bzx-exchange-nyse-nasdaq/.

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