The banks correctly calculated that they would benefit from greater competition in the provision of stock exchanges, so contrived to make that happen.
There would certainly appear to be similar forces at work with the launch of the Bats indices, except this time it has come from wealth and asset management firms rather than the investment banks.
The trumpeted ‘real-time’ aspect is also interesting, but seems more style than substance.
With the primary users of this service being mid and longer term investors rather than traders moving money by the minutes and seconds, having a fifteen minute delay on quotes is not really an issue.
Sure, it sounds good in the marketing literature to use the term ’real-time’ about practically anything and it is nice to have, but when you boil it down it is not likely to help investment firms make their clients or themselves more money.
If it does turn out to provide a real practical advantage in some way, or even just proves to be strong selling point, it seems fair to expect that FTSE will soon bring it into its own indices range anyway.
As with most developments in any industry what this all comes down to is the bottom line. This launch looks set to save wealth and asset management firms money, either by using the new service or forcing the FTSE versions to match the terms offered by Bats.
With choppy markets, regulatory pressure and increasingly demanding clients every pound saved by firms will be welcome.
