These are interesting times in the securities exchange industry, given the merger talk and all. BATS, despite its small size, continues to make waves. In February, it agreed to buy Chi-X Europe. In March, it announced it would will begin listing stocks soon in direct competition with the more established exchanges, the NYSE, Nasdaq, NYSE Amex and NYSE Arca.

BATS made news yet again last week by announcing that it will seek an IPO, aiming to raise $100 million and maybe more, which amounts to a terrific opportunity for the company's corporate owners--which include Bank of America, Citigroup, Morgan Stanley, Getco and Credit Suisse. Morgan Stanley, Citigroup and Credit Suisse are managing the IPO.

It has certainly been a meteoric rise for BATS, from a small start-up in 2005 out in Kansas to a public company that controls up to 10 percent of stock volume in the United States.

The company, along with Direct Edge, is known for its innovative approach to stock trading. Its BATS Y exchange, which launched in October, was not just another maker-taker exchange that pays rebates to liquidity providers. The new exchange pays liquidity takers a rebate of 3 cents per 100 shares. Liquidity providers will not pay any fees.

The future looks bright for an electronic exchange firm with very low costs. Given the merger mania in the industry, you would have to think BATS will enter that discussion at some point. Some have suggested Nasdaq OMX should consider a deal with the company if its NYSE Euronext gambit does not pan out.

For more:
- here's a MarketWatch article on BATS and Nasdaq OMX

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