CBOE Holdings Inc. executives are still hopeful that Bats Global Markets Holdings Inc.'s plan to execute orders during daily closing auctions will gain regulatory approval.
The proposal, dubbed Bats Market Close, has seen a flurry of critical reviews from fellow exchanges, including Nasdaq Inc. and the Intercontinental Exchange Inc.-owned New York Stock Exchange. Both rival exchanges have argued that the plan would lead to fragmentation and inaccurate pricing during the market close in various comment letters to the Securities and Exchange Commission.
"We found it ironic that both New York Stock Exchange and Nasdaq were so unsupportive of our proposal when they both offer close to competitive closing process on each others' closing listed stock," said CBOE President and COO Christopher Concannon during a second-quarter earnings call. "If they can compete, why can't we compete with them?"
Bats' plan would provide the same closing prices as the NYSE's and Nasdaq's closing auctions for stocks listed on their respective exchanges, but with a lower execution fee. Nasdaq previously said the proposal could lead to further market volatility in pricing at the end of the day.
Concannon said that the plan has received "great support" from other equity market players. Industry group Securities Industry and Financial Markets Association wrote in a letter to the SEC that the proposal would provide a "competitive alternative" to the primary market's auction. The group argued that this is vital as trading costs on primary markets continue to increase.
The proposal was initiated in response to customer demand, CBOE Chairman and CEO Edward Tilly said on the call. The SEC is set to either approve or issue a proceeding disapproval by Aug. 20. If the plan receives a proceeding disapproval, the SEC could have upwards of another 180 days to act on the proposal.
"It comes down to what is our legal right to have an offering, an offering that is largely already offered by the other exchanges," Concannon said.