Some old-timers in the industry still have a hard acknowledging that third largest exchange company in the United States, based in Lenexa, Kansas. But BATS has no plans to moderate its growth. It recently launched BATS Y Exchange for equities, to complement its first exchange launched in August 2008, notes Securities Technology Monitor.

This one is designed to hedge the firm in terms of its liquidity model. It will not be another maker-taker exchange--such exchanges pay rebates to liquidity providers. Instead, liquidity takers will be paid a rebate of 3 cents per 100 shares. Liquidity providers will not pay any fees. This is similar to the approach taken by Direct Edge, which also offers two exchanges with inverted pricing models.

The hope at BATS is that big retail brokers such as Charles Schwab and Fidelity will bring over huge aggregate orders to generate a bit of revenue. It's fair to say the pricing models will morph over time. The entire industry is hunting for that magic pricing bullet, which explains why we've seen so many new exchanges launch. Whether this resonates with the buy-side will be something to watch.

For more:
- here's the article

Related Articles:
Politician revives the flash order debate
Price banding to replace circuit breakers?
BATS to launch second exchange
Direct Edge adds two to list of formal exchanges