The Prop Trader's Chronicles: Short-Term Proprietary Trading Strategies for Both Bull and Bear Markets

BATS TRADING DUAL EXCHANGES—BZX (Z) AND BYX (Y)

Next up among today's top ECN platforms is BATS Trading, a Kansas City headquartered company founded in mid-2005. While its name on the typical Level 2 quote is as straightforward as it gets (BATS), it is shown on the tape as the letter Z. There's almost no logical explanation for this choice except for the fact that the letter B had already been taken by the Boston exchange at the time of the original BATS Trading ECN's launch.

Having stayed asleep (Zzz) somewhere far away from the financial capital of New York, BATS Trading aggressively marketed itself to day traders in 2005 with e-mail marketing campaigns and touted its maker-taker model, priced more aggressively than Island's offering at the time. As humble as can be, the name itself was originally an acronym for “Better Alternative Trading System.” In the years that followed, BATS gradually gained market share for its favorable pricing in the ECN world. Today, on highly liquid stocks, it's not uncommon to see displayed liquidity from BATS around the same size as NASDAQ's main ECN (the former Island) and Arca (the NYSE Arca ECN). It's also not uncommon to see as many, or more, Zs as Ps and Qs on many of the most liquid stocks' tapes.

Following Direct Edge's dual platform pricing (with one platform offering the traditional maker-taker model like Island and Arca and the other offering an alternative pricing structure), BATS cranked up the competition by acquiring the International ...