DIY Investor Magazine
/
September 2016
8
Bats Europe, the region’s largest stock exchange
operator has launched a series of UK-focused
benchmark indices that will revolutionise investors’ view
of the market, improve transparency and drive down
costs; after 32 years the FTSE100 has some serious
and credible competition.
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 aims to break FTSE’s monopoly of the market by
delivering ‘aggressively’ priced indices ‘with a long
term commitment to materially reducing costs for all
investors’.
With the industry committed to transparency post-
RDR and increasingly focussed on reducing costs at
a time of low investment returns, FTSE angered many
in 2012/13 when it hiked the cost of licences to use its
data and reduced flexibility for those doing so.
The ire generated at the time is palpable in a CityWire
headline that appeared at the time: ‘FTSE Licence Hike
Fury: What are the Alternatives?’ Another described
wealth managers as ‘seething’.
Bats knew what the alternative would be and its
commitment to reduce costs has struck a chord with
wealth managers, retail stockbrokers, media channels
and investors alike; ultimately, higher data fees
percolate through to the investor, creating a headwind
for investment performance which is completely counter
intuitive to those seeking to drive down costs and
democratise investing.
Mark Hemsley, chief executive of Bats Europe, said
that the launch was driven by retail brokers who were
dissatisfied with the existing indices; ‘The cost of
indices is rising, and so they’re unhappy about that,’
he said. ‘The nature of the licenses is that they have
become more complex and intrusive.’
BATS CHALLENGES FTSE100 MONOPOLY
& REDEFINES THE MARKET
However, not satisfied by merely being cheaper than
FTSE, aided by its unique position as the largest
pan-European stock exchange, Bats has completely
shaken up the market to the benefit of brokers and retail
investors alike.
Key benefits of the new indices are that they:
•
Are published in real time, rather than with a
fifteen minute delay
•
Start with a base value of 10,000, 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
•
Are highly correlated with comparable benchmarks
to accurately reflect market moves
When DIY Investor announced the launch of Bats’ 18
new indices covering large and small cap securities
and 12 different sectors (
Bats to the Future – DIY
Investor 14th June
) it also confirmed that it would be
an early adopter, delivering real time pricing data to
its users. Bats’ flagship index is the Bats UK 100 or
‘BUK100’, an index of London-listed blue-chips that
will go head to head with the London Stock Exchange
owned FTSE 100.
