Less than two years after becoming an equities exchange BATS that has taken the market by storm they have their sites on doing some of the same magic with option trading. I for one think this is about as good of a thing that could happen to the options market (well maybe not for the good ol boy club of CBOE and its members ) but for the rest of us that have had to play second fiddle to the market makers its great news. I can’t wait for the retail trader to be able to play the role of market maker and watch the volume and universe of options explode like equities did once the playing field was leveled. BATS intends to use a maker-taker pricing so that those adding the liquidity are rewarded with some of the fees. nothing in my opinion could be better for the options market as long as retail traders are able to bid and ask at the same time. The dinosaur of a rule that keeps the pockets of market makers full by avoiding the competition of others needs to go in a truly free marketplace. BATS coming along to shake things up will be a very good and a big step in the right direction.
BATS has appeared to me that they know how to become very aggressive in their pricing and very quickly became super competitive with other ECNs and now exchanges. They are not based in NY City like so many others. If you want to send mail to them you will be sending it to Kansas. Just one of many things that they have done to be able to have a lower cost of doing business. If you ever take a look at the current price of a stock on Yahoo you will see that you can actually see FREE real time pricing thanks to BATS which in over 20 years of trading stocks I have not seen anyone else do.
BATS to me is what makes the free market so great. Companies are forced to keep their focus on providing the best service at the best price or someone else will come along and do it. the NYSE and to a lessor extent NASDAQ (and very soon the CBOE) can learn a lot from this new exchange
Good luck BATS !!
Disclosure : no posistions