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INTERVIEW: BATS Aims To Double European, FTSE 100 Trade Share

By Vladimir Guevarra, Of DOW JONES NEWSWIRES

LONDON -(Dow Jones)- BATS Europe, a year-old pan-European equities-trading platform, said Friday it aims to double its market share in European and FTSE 100 trading over the next year, threatening the positions of incumbent stock exchanges in Europe, including the London Stock Exchange.

"Given that we're hitting about 4% of the pan-European market, we'd like to double that and by the end of next year hit about 8% of the European market," BATS Europe Chief Executive Mark Hemsley told Dow Jones Newswires.

"For the FTSE 100, we expect to be higher. If we could double where we are as well, and we're hitting 8% or 9% at the moment, if we could double that, I'd be very pleased. That's what we'd like to target. What we're trying to do is, across the board, double the position we're in," Hemsley said.

BATS Europe started trading Oct. 31 last year and has since grown its market share.

Data from Thomson Reuters show that BATS Europe's 0.3% average share in European trading volume in November last year has grown to 3.2% last month. Its 0.77% share of FTSE100 trading volume in November last year has risen to 7.16% last month.

Over the same period, the London Stock Exchange Group PLC's (LSE.LN) share of FTSE 100 trading has fallen from 77.4% to 59.6%.

After the European Union introduced rules to increase competition in stock trading in the region, so-called multilateral trading facilities or MTFs like BATS Europe, Chi-X Europe Ltd., Nasdaq OMX Europe and Turquoise have mushroomed in the past two years.

Being small and new, they have been using their faster trading speeds, cheaper fees and low operating costs to battle the traditional stock exchanges.

Chi-X, the most successful MTF so far, has seen its FTSE 100 market share grow from 16% in November last year to 23% last month.

Last month, the LSE said it was in exclusive talks to buy Turquoise, possibly eliminating one of its new competitors.

To boost market share, Hemsley said BATS Europe will keep increasing its number of trading customers.

"We're bringing in new firms from a wider base in Europe. We've been concentrating on France, the Netherlands and the U.K., but we're starting to work on a wider basis across Europe. There are some trading firms in Scandinavia, Germany, Italy or Spain that we'd like to attract to our market. I think we can do that," Hemsley said.

He said BATS Europe's parent company in the U.S., BATS Global Markets Inc., has also been introducing to him some U.S.-based trading firms that would like to trade in Europe.

Of BATS Europe's 90 or so clients, more than 50 are trading firms. "We're looking to significantly increase the number of firms in trading next year," he said. Nontrading firms are mainly those that subscribe to market-data and routing services.

Hemsley said there are still "a couple of hundred" potential client trading firms in Europe, of which at least 50 could provide "strong trading" for equities markets.

Hemsley also said BATS Europe could start making profits next year. "Our target was to get to break-even about the end of next year. We're ahead of our business plan. It's going very well."

He said the possible sale of Turquoise could mark the start of a consolidation of the European trading sector, including smaller stock exchanges and not just the MTFs.

He declined to be compared directly to Turquoise on the possibility of also being bought by a competitor.

"What I'm convinced about is that BATS has a strong future, both in Europe and in the U.S....We've got a good structure with first-class technology and a low- cost base. I think we're a very strong contender," he said.

-By Vladimir Guevarra, Dow Jones Newswires. Tel. +44 (0) 2078429486, vladimir.guevarra@dowjones.com

  (END) Dow Jones Newswires
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