Bats Global Markets’ initial public offering may value the second-largest US stock exchange operator at as much as $2.1bn, more than double the expected valuation in its first attempt four years ago.
The company will sell 11.2mn shares in a price range of $17 to $19, according to an updated filing yesterday. The firm’s value has jumped from the estimated $760mn at the time of its aborted 2012 listing. Bats will list its own shares under the ticker BATS.
Bats begins its roadshow for the offering as soon as this week, according to a person familiar with the plans. Although it’s already April, Bats would be one of the first US IPOs of 2016. Stock-market volatility and investor unease reduced the number of companies willing to list their shares in the first quarter.
The Lenexa, Kansas-based securities market withdrew a previous listing because an error in trading software stopped its shares from opening properly. The company has expanded since then by moving into markets including foreign exchange and options. It has become the biggest pan-European stock exchange. And it now lists exchange-traded funds.
The $2.1bn valuation would make the market operator the 17th biggest globally by market capitalization. Bats’s stockholders have the option to sell another 1.68mn shares, which would increase the size of the sale to 12.88mn shares, according to the filing.
Bats was formed more than 10 years ago by a consortium of financial institutions to rival the New York Stock Exchange and Nasdaq Stock Market in technology, speed and pricing. It is the biggest US stock-exchange operator behind NYSE. Its owners include JPMorgan Chase & Co, Goldman Sachs Group, KCG Holdings and Citadel.
The company’s listing would be Bats’s first, potentially opening up a new line of business for the exchange operator and giving it an opportunity to compete with NYSE and Nasdaq.
The company has a heritage of cutting-edge technology. The time it takes for Bats to process an order message has decreased 94% to 57 microseconds from more than 930 microseconds in January 2007. 


Traders talk whilst examining financial data on computer screens on the trading floor of Bats Chi-X Europe, the European arm of Bats Global Markets in London. Bats’ initial public offering may value the second-largest US stock exchange operator at as much as $2.1bn, more than double the expected valuation in its first attempt four years ago.


Dollar bulls adhere to
history for redemption
after wrong-way bet


Bloomberg
London




The dollar’s worst quarter in more than three years has the currency’s backers boning up on their history to judge whether its long-term advance is finished.
The lessons of the past are encouraging. A trade-weighted dollar index from the Federal Reserve has had two previous sustained rallies in the past five decades, starting in 1979 and 1995. Each went on for longer, and produced bigger gains, than its 32% appreciation since mid-2011.
The previous advances lasted an average of 74 months and boosted the dollar by about 40-50%. Comparing that with the 57 months since the greenback started its latest spurt suggests to some the gains have at least another year to run. 
Even if the Fed is tightening policy slowly, the bulls say it’s still diverging from major peers that are committed to currency- weakening stimulus for some time to come.
“We wouldn’t toll the death knell for the greenback just yet,” said Steven Barrow, London-based head of Group-of-10 research at Standard Bank Group Ltd, whose first-quarter euro- dollar forecast was only about a cent off where the rate ended up. “We’d feel more confident in calling a top in the dollar if it had risen more to match prior cycles. The dollar’s uptrend has another year, or more, to go.”
Standard Bank predicts gains of 8% to $1.05 to the euro and 12% to 125 yen in the next 12 months, from $1.1363 and 111.67 in New York. That’s more optimistic than the median estimates in Bloomberg surveys of $1.09 and ¥118.
Whether the dollar can sustain the gains of the past few years is the number-one debate in the foreign-exchange market in 2016. Many bulls have already capitulated, with others joining their ranks after the Fed signaled last month a slower pace of interest-rate increases. The dollar’s value affects virtually every walk of life in business and finance, from Chinese monetary policy and the price of commodities to company earnings.
The dollar has had two previous bull runs since the Bretton Woods system of fixed exchange rates ended in 1971.
The first began in about August 1979, when Paul Volcker became Fed chairman and presided over a period of monetary tightening. The rally lasted until February 1985, shortly before the world’s richest nations signed the Plaza Accord, agreeing to intervene to weaken the dollar to help the US economy out of a recession.
The second rally began around May 1995, when new US Treasury Secretary Robert Rubin presided over an expanding domestic economy. The dollar’s gains topped out in January 2002 amid speculation President George W Bush wanted a weaker exchange rate to boost exports and manufacturing. This time around, the dollar hasn’t risen as much as in those previous cycles.
The Fed’s US Trade-Weighted Major Currency Dollar index – which tracks the greenback against a small group of peers including the euro, yen and pound – climbed 39% from July 2011, when rich nations intervened to slow the yen’s appreciation, through to its peak this January.
That compares with gains of 54% and 41% in the runs starting in the 1970s and 1990s, data compiled by Bloomberg show. When the pullback since January is included, the current rally is smaller still.
To Royal Bank of Scotland Group strategist Mansoor Mohi-uddin, the dollar’s recent setback is reminiscent of what happened in the middle of the previous bull-run, when the Fed cut interest rates in 1998 to deal with the fallout from the Asian crisis, only to resume raising them the following year.
“The dollar had about three to four years of outperformance afterward,” Singapore-based Mohi-uddin said. “I would argue that we’re in a similar situation to what we saw in the late 1990s, where the Fed was very worried about global financial markets. What we’re seeing now is just a pause rather than the end of a long-term uptrend.”
In 2010, Mohi-uddin correctly predicted the dollar would lose its haven status and start moving in line with higher- yielding assets such as stocks - presaging the moves of the next five years, until the relationship was undermined by signals of an imminent rate increase.