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Press releases 2011 -

OFT refers equity trading merger to the Competition Commission

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67/11    20 June 2011

The OFT today referred the anticipated acquisition by BATS Trading Limited of Chi-X Europe Limited to the Competition Commission for further investigation.

Both companies operate Multilateral Trading Facilities (MTFs) which enable market participants (investment banks, brokers and dealers) to trade pan-European equities through a single platform as an alternative to trading on national exchanges such as the London Stock Exchange (LSE). MTFs are relatively new, having mostly formed following the introduction of the European Markets in Financial Instruments Directive in 2007. Billions of pounds worth of equities are traded on these platforms daily.

After the LSE, the merger parties are the two largest MTFs for the trading of UK-listed equities. The merger reduces the number of significant suppliers of trading services for UK-listed equities from three to two. In addition the parties have very similar service offerings. Although the evidence is mixed, the OFT believes that there is a realistic prospect that, absent the merger, the parties would going forward have competed more strongly against each other, as well as competing against the LSE.

Ali Nikpay, OFT Senior Director and decision maker in this case said: 

'This case is not one in which we have encountered widespread customer complaints. However, we cannot rule out the prospect that such a structural shift in the marketplace would lead to a substantial lessening of competition. We have therefore referred the merger to the Competition Commission for a more detailed investigation so it can determine whether a substantial lessening of competition is probable.'


  1. The reference test - the OFT has a duty to make a reference to the Competition Commission if it believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation, and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services. 
  2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced. 
  3. The Competition Commission is expected to report by 2 December 2011. It may extend the 24-week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
  4. The full text of this decision will be available from the decision page at a later date. 
  5. Markets in Financial Instruments Directive (2004/39/EC) came into force in November 2007. The Directive has increased competition in trading venues by allowing MTFs registered in one EEA country to offer trading in equities listed anywhere in the EEA.

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