Lenexa-based Bats Global Markets, which operates the second-largest U.S. stock exchange, is buying a currency market.
Bats on Wednesday announced an agreement to pay $365 million for Hotspot FX, a spot market for currency trading. Hotspot is an electronic market where institutions, dealers and retail broker clients can carry out foreign exchange transactions.
The agreement is with KCG Holdings Inc., based in Jersey City, N.J. In its announcement, KCG said it could receive up to $70 million over the next three years under a tax sharing agreement tied to the sale.
“This is a great deal for our shareholders because while it was a very valuable asset, it was not a big enough asset to be reflected in our share price,” Daniel Coleman, KCG’s chief executive officer, told Bloomberg News.
KCG said it agreed to sell Hotspot FX to Bats after conducting a competitive process to find a buyer. It cited Bats’ “commitment to technological excellence” and its experience operating global markets in different kinds of assets.
Bats said the purchase, which is expected to be completed before July, is part of its strategy of expanding its business in non-equity trading.
“We look forward to leveraging the Hotspot team and distribution network with the Bats core philosophy of making markets more efficient, transparent and competitive,” Bats president Chris Concannon said in its announcement.
Concannon became Bats’ president in December. He had been president of Virtu Financial Inc., a large trading company active in stock, bond, commodity and currency markets. Concannon previously had been executive vice president for transaction services at Nasdaq.
Bats also operates stock exchanges in Europe and an options market in the United States.
In U.S. stock trading, Bats’ exchanges handle about 20 percent of daily volume, slightly ahead of Nasdaq and second to the New York Stock Exchange.