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Bats Global Markets’ chief executive Chris Concannon couldn’t resist a few predictions in the last newsletter before its acquisition by CBOE Holding closes on Tuesday.
The letter was mostly dedicated to summing up Bats Trading’s history and accomplishments since its beginnings as “an electronic communications network (ECN) in a North Kansas City storefront, surrounded by a bakery, a barber shop, a florist and a drug store.”
In a postscript, Mr Concannon forecast that Reg NMS – the rules that govern US equity trading – would come “under serious review” in 2017, and that this year should be a “banner” one for public listings, among other things.
Reg NMS was passed about a decade ago to boost competition in the world’s largest equity market. But calls to revisit it have grown ever louder since regulators last year interpreted an aspect of it in tandem with its approval of IEX as a registered exchange.
IEX uses a speed bump of 350 microseconds on incoming and outgoing orders. The US Securities and Exchange Commission decided that delays of less than a millisecond were de minimum, leading other venues – including rivals Nasdaq, NYSE and Chicago Stock Exchange – to experiment with speed.
Reg NMS has also come under scrutiny for whether it has unintentionally increased complexity and fragmentation, as its critics say. The SEC is also expected to examine its various rules as the new administration takes office.
US IPO volume was the slowest in 2016 since the fallout from the financial crisis in 2009. But some are predicting a pick-up this year on the back of the underlying market rally and high-profile listing for Snap, the messaging app eyeing a market capitalisation of nearly $200bn.
Mr Concannon also thanked Bats’ customers, issuers and supporters, describing Bats as disruptor that enhanced competition and helped to improve market structure.
“Of course, the pending combination with CBOE doesn’t spell the end of the journey for Bats but is instead a major milestone in our mission to Make Markets Better by leveraging great technology and a unique spirit of innovation,” Mr Concannon said.