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Financial Software - Friday, June 1, 2007

Nasdaq Alternative BATS Raises $45M F/ Citi

Kansas City-based BATS Trading has raised $45M in second-round funding led by Citigroup. BATS launched in mid-2005 with $40M from Credit Suisse, Getco, Lehman Brothers, Lime Brokerage, Merrill Lynch, Morgan Stanley and Wedbush.

The company was founded by David Cummings, a former wheat trader on the Kansas City exchange, who formed BATS when he noticed a void of alternative electronic trading sites that could compete with Nasdaq and hold down trading costs for brokers. Wall street brokerages have embraced the exchange with investments.

About 300 million shares trade daily through Bats Trading. The shares include customer trades executed by the brokerage firms that own most of Bats Trading, much in the way Nasdaq was industry-owned before it became a publicly traded company. Bats, however, is technically a broker-dealer firm and reports its trade volume through the National Stock Exchange, an electronic stock exchange based in Chicago. BATS says it has abandoned plans to buy a regional exchange like the National or Chicago stock exchanges. Instead, Chief Executive David Cummings has asked the Securities and Exchange Commission to review its application for exchange status. Cummings also says that BATS is close to profitability.

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