Bats to the Future – ‘BUK100’ launches to Rival FTSE Dominance
Bats Europe, the region’s largest stock exchange operator has announced the launch of a new UK-focused benchmark index designed to go head to head with 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 is a division of the Kansas City-based Bats Global Markets group, and it 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 seeks to break what it sees as FTSE’s monopoly of the market 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
Early supporters of the new initiative have been Alliance Trust Savings, AJ Bell, Charles Stanley Direct, Hargreaves Lansdown, Rathbones, Selftrade and TD Waterhouse – brokers and wealth managers that between them control assets in the region of £160bn.
Bats CEO Mark Hemsley said the indices would bring competition to a market that had become inefficient, expensive and lacked innovation to the point where customers had demanded change.
‘market that had become inefficient, expensive and lacked innovation to the point where customers had demanded change’
He added: ‘a lot can happen in fifteen minutes and by giving investors an accurate, immediate view of precisely where the market is moving, we can help them make better informed trading and investment decisions. We’ve sought to make markets better, and more cost-efficient, for investors and traders – a first and very important step in improving index provision in Europe.’
Sara Wilson, head of platform proposition at Alliance Trust Savings, said: ‘The launch of the new indices is extremely positive news for the industry, giving investors the chance to access real-time stock market information from a respected source.’
Paul Chavasse, head of investment at Rathbones, said: ‘Bats is providing a comprehensive, robust and low-cost set of real-time indices to end investors. This will offer more depth to the market for data provision, giving clients the information they need to help build and monitor their portfolios better.’
Bats Global markets is a leading global financial markets operator with a track record of bringing world-class technology, products and services to markets that bring competition to monopoly style market structures; the indices will provide index data calculated using Bats’ own market data. They are free of charge to private and professional investors, and for benchmarking purposes.
Observers will point out that much of the discontent expressed by traditional consumers of FTSE data stemmed from the price rises that were imposed in 2012/13 – summed up by a CityWire headline in April 2012: ‘FTSE Licence Hike Fury: What are the Alternatives?’ – thereby creating the opportunity for Bats to step in.
This is certain to be a hotly debated topic in the coming months, but if competition translates to better availability of data and keener pricing for investors then it would be churlish not to applaud Bats’ initiative; watch this space for a FTSE riposte.