BATS IPO To Heat Up Public Exchange Competition (NYX, NDAQ, CBOE)

NYSE Euronext (NYSE: NYX), NASDAQ OMX Group, Inc. (NASDAQ: NDAQ) and CBOE Holdings, Inc. (NASDAQ: CBOE) are all about to have yet one more public exchange competing against them for the attention of investors after today.  BATS Global Markets is coming public in an initial public offering after its shares are set for pricing on Thursday.

The IPO ranks on our own Top 17 IPOs to Watch in 2012.  It is odd, but this one may be difficult for Joe Public to play in as the quote systems of most investors only take NASDAQ, NYSE, and the old AMEX quotes today.

The offering is to be for 6.3 million shares with an expected price range of $16.00 to $18.00 per share.  The exchange is the third largest exchange now with 10.9% market share in the U.S. for February share volume versus a market share of 10.7% a year ago.  Its options trading called BATS Options is shown to have a 2.8% market share compared to 1.7% a year ago with average daily matched volume of 483,306 contracts.

On a valuation basis, BATS is valued at a premium more like CBOE than the lower multiple of earnings like NASDAQ and NYSE.

The underwriting group is rather large.  Lead underwriters are Citi, Morgan Stanley, Credit Suisse; additional underwriters are Deutsche Bank Securities, Wedbush Securities, J.P. Morgan, Bank of America Merrill Lynch, Raymond James, Sandler O`Neill & Partners, Rosenblatt Securities, and Nomura.

Here is the Barron’s article called “Bullish on BATS” to read as well.

JON C. OGG