BATS FX Unit Hotspot Closes a Flat Year With a Seasonal Decline

Trading volumes throughout the year have registered modest growth when compared to many peers.

The foreign exchange subsidiary of BATS Global Markets, Hotspot has marked a solid year for the unit. December data shows that the company registered a monthly decline in trading volumes by 20 percent on a nominal basis. The figure reported by the company at the end of the month totaled to $536.4 billion. The month-on-month numbers in December were greatly affected by the seasonality of trading volumes around holidays.

Hotspot registered a very slight year-on-year increase in the monthly trading volumes figure totaling just above 1 percent. The company’s performance throughout the year has been marked by a lot of volatility, in tune with the broad market trends.

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Looking at the Average Daily Volumes (ADVs) the figure totaled $24.4 billion. The number is higher by 1.2 percent when compared to December 2015 and lower by 20 percent when compared to November 2016.

Looking at Hotspot’s totals for the year, the number is representative of a slow pace of increasing trading volumes during 2016. The foreign exchange subsidiary of BATS Global Markets was acquired by the Chicago Board of Options Exchange (CBOE) in September for $3.2 billion in cash and stock.

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Throughout 2016 the total trading volume at the foreign exchange trading Electronic Communications Network (ECN) owned by BATS Global Markets totaled just under $7 trillion ($6.998 trillion to be precise). The number was more or less flat when compared to 2015 when the year end figure marked $6.93 trillion.

The unit’s prospects for 2017 hinge not only on broad FX volatility, but also on the company’s strategy of delivering a good service to its clients. The CEO of BATS Global Markets, Chris Concannon, led the effort to buy the foreign exchange ECN in the beginning of 2015.

BATS Global Markets acquired the firm for $365 million from KCG Holdings, in order to complement its array of different financial market products, which the company is offering around the globe. CBOE has initially indicated that it is keen to continue its work in the FX space and is likely to do so in the coming years.

The success of the new owner will hinge on adapting to what is likely to be a very competitive market place, especially if the Trump administration rapidly parts with the Dodd-Frank Act.

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