New Real Time European Market Benchmarks
The largest pan-European stock exchange, Bats Europe (Bats), has introduced Bats Indices — real-time, high-quality alternatives to commonly used indices whose values are often delayed by 15 minutes.
Bats Indices have changed the way investors see the market allowing them to track market movements as they happen, better informing trading and investment decisions.
- Real-Time Index Values– Most market tracking indices are shown to individual investors with a 15-minute delay.
- High Quality, Pan-European Data – All of the Bats Indices are calculated using data based on the trading taking place on its exchange with the exception of the Bats UK Alternative 100 which uses ISDX data.
- Simplifying Cost and Licensing – Bats has committed to significantly lower license costs with capped fee increases and extends rights to affiliates, trustees, custodians and clients.
- Robust, Trusted, Regulated – Bats is a stock exchange regulated by the UK’s Financial Conduct Authority (FCA) with a proven commitment to improving markets.
- Transparency – Unlike some other index providers, Bats publishes the licence agreements, fees and rules and calculation methodology behind its indices.
- Consistency – All Bats indices are created with the same methodology allowing comparable benchmarks across sectors, between large and small cap, and as other indices are introduced, markets and regions.
What is an Index?
An index is group of stocks designed to reflect the performance of a market, or a portion of a market (e.g. an industry sector).
When first established, an index can start at any value. Investors track the change in the value to see market movements rather than the value itself.
An index is generally comprised of a portion of the overall universe of stocks in a geography, business sector or other grouping. Commonly referred to as “benchmarks” the index reflects a market’s performance.
Indices are typically named to reflect the:
- Index creator/owner
- Specialisation (geography, business sector, grouping)
- Number of stocks in the index, e.g. Bats UK 100 index
Mathematics and Methodology Behind an Index
The methodology for calculating an index varies and is proprietary to each index creator/owner. A number of rules are required to ensure the index value is only affected by the change in the value of the individual stocks.
For instance, the performance of larger companies has a greater impact on the value of a market capitalisation weighted index than smaller companies.
An index is reviewed on a regular basis to ensure it remains representative of the relevant market. Upon review, known as a rebalance, constituents can be removed and replaced by companies that better reflect the overall market.
The frequency of rebalances varies by index, whilst all are rebalanced on an annual basis, many are also rebalanced on a quarterly basis.
A company is considered eligible to be an index constituent if it meets the criteria stipulated in the index’s rules.
Such criteria can require the company to have a minimum market capitalisation, to have listed a minimum percentage of its shares (its free float), and to possess a minimum level of trading liquidity.
Bats Europe is the largest stock exchange in Europe by market share and value traded.
Based in London, the exchange offers trading across 15 major European markets on one platform.
The Bats Europe exchange is developed internally by a dedicated team of market and technology professionals to cater to the needs of the European trading community. It is hosted in a world-class data centre in London.
Bats simplifies cross-border equities trading with access to services for each stage of trading – all through one exchange.
Bats Europe offers access to:
- A regulated exchange with world-class surveillance and supervision.
- Innovative risk management tools designed to help maintain an orderly and safe market.
- Flexible post-trade solutions for efficient and cost-effective clearing and settlement.
15 Markets Across Europe
Bats offers trading in the UK, Austrian, Belgian, Danish, Dutch, Finnish, French, German, Italian, Irish, Norwegian, Portuguese, Spanish, Swedish and Swiss equities, Exchange Traded Funds, Exchange Traded Commodities, Exchange Traded Currencies and Depositary Receipts.
Our Parent, Bats Global Markets
Bats began in 2005 with 13 people as an alternative trading venue aimed at bringing competition and innovation to the U.S. equities market. Since then, Bats has grown and evolved into an operator of markets around the globe with exchanges serving multiple regions and asset classes.
- In the U.S., Bats regularly ranks as the #1 or #2 largest stock trading venue, and is the largest destination for ETF and retail trading.
- Bats Options operates two fast-growing U.S. cash equity options exchanges.
- Bats owns and operates Hotspot, a leading institutional spot foreign exchange market, serving the global currencies market — the world’s largest asset class.
Making Markets Better is central to everything we do. Whether it is a new product offering, a new business initiative or a policy discussion, we’re focused on improving the quality of our markets in ways that will benefit all participants.
The participants of the Bats Global Markets stock exchanges are registered broker-dealers and include a broad range of financial market participants. The diversity of participants on our various markets is essential to the health and vibrancy of these markets.
Proof of the health of the Bats markets is shown by the quality of the stock prices on Bats Europe, which are better than or equal to the national market in the most active stocks most of the time.*
The following are some examples of the types of firms that trade on our markets.
Automated Market Makers: Electronic market-making firms
Agency Broker: Broker focused solely on agency execution for their customers
Retail: Retail brokers directly routing trades to Bats
Proprietary Trading Firms: Firms that trade for their own account whose primary activity is not market making
Wholesalers: Broker-dealers that function primarily as market makers for retail orders
Local Banks: Banks that offer trading services in a specific country or region
Bulge Bracket: Large investment banks offering trading and research
Bats on DIY Investor
See Bats real time data on DIY Investor
Bats Challenges FTSE Monopoly and Redefines the Market
Bats Europe, the region’s largest stock exchange operator has launched a series of UK-focused benchmark indices that will revolutionise investors’ view of the market, improve transparency and drive down costs; after 32 years FTSE has some serious and credible competition.
Bats Europe is a division of the Kansas City-based Bats Global Markets exchange group, and it has developed the indices in consultation with ‘incredibly frustrated’ investors and index users to deliver a ‘robust and trustworthy’ alternative to the incumbent.
Bats aims to break FTSE’s monopoly of the market by delivering ‘aggressively’ priced indices ‘with a long term commitment to materially reducing costs for all investors’.
With the industry committed to transparency post-RDR and increasingly focussed on reducing costs at a time of low investment returns, FTSE angered many in 2012/13 when it hiked the cost of data licences and reduced flexibility for licensees.
The ire generated is palpable in a CityWire headline that appeared at the time: ‘FTSE Licence Hike Fury: What are the Alternatives?’ Another described wealth managers as ‘seething’.
After numerous requests from investors and index users, Bats designed an alternative in consultation with the industry and its commitment to reduce costs has struck a chord with wealth managers, retail stockbrokers, media channels and investors alike; ultimately, higher data fees percolate through to the investor, creating a headwind for investment performance which is completely counter intuitive to those seeking to drive down costs and democratise investing
DIY Investor Delivers Real Time Pricing Data from Bats
DIY Investor is pleased to announce that it has partnered with Bats Europe, the region’s largest stock exchange operator, to deliver real time pricing data to its clients for the first time.
Bats recently announced the launch of a new UK-focused benchmark index designed to offer an alternative to the world-famous FTSE group of indices; its flagship, and one of eighteen new indices covering large to small cap companies across twelve industry sectors, will be the Bats UK 100, or “BUK100”, an index of London-listed blue-chips.
Bats Europe, has developed the new indices in consultation with ‘incredibly frustrated’ investors and index users to deliver a ‘robust and trustworthy’ alternative to the incumbent
Bats plans to challenge the status quo by delivering ‘aggressively’ priced indices ‘with a long term commitment to materially reducing costs for all investors’.
Key features are that the new indices will:
- Be published in real time, rather than with a fifteen minute delay
- Start with a base value of 10,000, described as a ‘unique detail that will ensure the performance of markets and sectors is easy to compare’
- Have simplified licensing arrangements and a commitment to materially reduce costs
- Be highly correlated with comparable benchmarks to accurately reflect market moves
Bats to the Future: ‘BUK100’ Launches to Rival FTSE Dominance