Lenexa-based Bats, the nation’s second-biggest stock exchange, completes successful IPO

Dave Cummings, shown in a 2007 photo, formed Bats Global Markets as a “better alternative trading system” in the face of mergers among equity trading centers that he felt left too little competition to benefit traders like himself.
Dave Cummings, shown in a 2007 photo, formed Bats Global Markets as a “better alternative trading system” in the face of mergers among equity trading centers that he felt left too little competition to benefit traders like himself.

Lenexa-based Bats Global Markets debuted Friday as a publicly traded company, marking another milestone for the upstart business of a Park Hill High School computer geek who shook Wall Street’s foundations.

Bats’ initial public offering of stock valued the 11-year-old company at $1.8 billion. It was the Kansas City area’s first big IPO since AMC Theatres debuted in 2013.

And Bats launched trading of its shares on its own stock exchange, which has become bigger than the Nasdaq and close behind the New York Stock Exchange in daily trading volume.

“Maybe initially I would have hoped it wouldn’t have taken 11 years but, gosh, the time’s gone by fast,” said Dave Cummings, the computer geek who founded Bats in 2005.

Cummings became a stock trader after a short stint at Cerner Corp. and as a commodities trader at the now-shuttered Kansas City Board of Trade. There had been several electronic markets for trading, but they mostly had been snapped up and merged together, leaving too little competition for Cummings’ liking.

The company’s unusual name came from Cummings’ mission to devise a Better Alternative Trading System.

Bats itself has been a steady acquirer, becoming No. 2 in trading volume by merging with Direct Edge in 2014. It also entered the public arena amid a flurry of mergers and buyouts of U.S. markets, including the Intercontinental Exchange’s $11 billion purchase of the NYSE’s publicly traded parent company in 2013.

Friday’s milestone for Bats was long in the making, not the least because of its failed effort to launch its stock on the Bats Exchange in 2012. A “software bug” stopped that IPO in its tracks on March 23, 2012, and sent its owners to the sidelines.

The new effort was a clear success, with shares priced originally at $19 and jumping to $22.88 in the first transactions in which they changed hands. Bats shares finished their first trading day at $23.00, up $4, or 21 percent.

It may have helped that little else was going on Friday. Morning trading volumes generally were light when the stock launched, and Wall Street has seen few IPOs this year.

“It’s a great time to launch a stock when it’s quiet in the market. You’re the only interest,” said Eric Hunsader, whose company, Nanex LLC, provides real-time market data to traders.

Cummings still owns some of Bats through his trading company called Tradebot Systems. But his stake is less than 5 percent, which means it was not detailed in the documents Bats filed to go public. He is no longer directly involved in the company, though a Tradebot employee is on Bats’ board of directors.

Initial public stock offerings routinely bring pressure on the financial firms that handle the launch and on the company whose shares immediately get an instant repricing by investors. Bats’ use of its own exchange and the unfortunate failure of its first attempt made Friday’s IPO all the more pressure-packed.

“Reputationally, if they don’t pull it off, I don’t know if they’ll have another chance,” Paul Gulberg, an analyst at Portales Partners LLC, said before the launch.

CNBC and The Financial Times each reported the jump in Bats prices as the first shares traded hands Friday.

Bats’ IPO is likely to have little direct impact on the company.

The initial stock sales at $19 allowed Bats’ owners — mostly big financial firms including Bank of America, KCG Holdings and Goldman Sachs Group — to collect $253 million for the Bats shares they sold in the offering. Cummings’ Tradebot did not sell shares in the offering.

Also, Bats issued no new shares and collected none of the proceeds of the offering.

Bats officials declined to comment Friday, citing the need to remain quiet amid the stock’s debut.

It was anything but quiet at the company’s Lenexa headquarters, where about 140 employees worked and cheered as Chris Isaacson, the head of technology, rang a bell with the stock’s launch. Bats has 286 employees in all, with the rest working in New York and in London, where it operates other financial markets.

Lenexa is the technology center for the stock exchange. It’s where the work of designing, building and running Bats’ U.S. markets is done. Its New York offices include some sales and the foreign currency market business that Bats acquired. London is home for its markets in Europe.

Bats’ own shares are the only public company shares listed on its U.S. exchange, though the shares trade throughout the network of stock exchanges, dark pools and other trading venues that make up the U.S. stock market.

And Bats has no plans to seek other companies to go public by listing shares on its exchange. It will remain focused on listing shares of exchange-traded funds, which own securities of various businesses like traditional mutual funds do but issue their own shares that trade in the market. It currently lists 83 ETFs.

Trading in the newly public stock remained strong throughout the first day, according to prices available through Yahoo Finance. Bats’ stock price, however, was not available Friday at

“We only cover Nasdaq, NYSE, OTCBB and Amex symbol listings on at this time,” an email from explained.

Mark Davis: 816-234-4372, @mdkcstar