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Upstart electronic market operator BATS Global Markets plans to launch a new U.S. listings market by the summer of 2010, seeking to compete against much larger rivals amid a global slowdown in initial public offerings.

BATS' move into listings comes amid a broader push to diversify beyond cash equities trading, where it has taken about 10% of the U.S. market, and into new fields like options and stock indexing.

"We've had issuers come to us and say their needs aren't being met with the current listings markets," said Chris Isaacson, chief operating officer of BATS, in an interview. "We recognize there's going to be a long lead time, but exchanges are at the center of capital raising and capital formation."

Isaacson said BATS' initial focus would likely be on issuers of exchange-traded funds as well as start-up companies.

BATS launched in early 2006, backed by a consortium of banks and trading firms, and its focus on fast execution speeds and competitive pricing helped it take business from larger rivals NYSE Euronext (NYX) and Nasdaq OMX Group Inc (NDAQ).

After securing exchange status and expanding into European stock trading, BATS now has a host of new projects planned for 2010, including an options market and a second U.S. stock platform. It also has introduced the BATS 1000 stock index, based on the performance of 1,000 securities across 10 sectors.

As BATS adds staff and begins to court issuers for its new listing venue, Isaacson said that an initial public offering for BATS itself was one of several potential paths being evaluated by the company.

The company enters the U.S. listings fray as exchange executives forecast a rise in new public offerings next year, after the financial crisis put many companies' IPO plans on hold.

Initial public offerings took a sharp drop in 2008, with the total value of deals globally coming in at less than one-third the 2007 level as the financial crisis deepened.

While the market has stabilized this year, few deals were done in the first half, and total capital raised through initial public offerings isn't likely to top 2008's $107 billion.

For the year through late November, NYSE Euronext saw a total of 45 IPOs, raising an estimated $20.9 billion, according to figures from research firm Dealogic. Nasdaq OMX had 32 deals, with an estimated value of $8.1 billion.

BATS also is entering an increasingly competitive sector, with more platforms vying for listings of all sizes.

Beyond the major listing venues operated by NYSE Euronext and Nasdaq OMX, smaller companies seeking public capital are being courted by TSX Venture Exchange, a unit of Canadian exchange operator TMX Group (TMXGF, X.T), as well as OTCQX, operated by Pink OTC Markets, which also runs the Pink Sheets.

Nasdaq OMX plans to introduce its own junior listing venue, called BX, which it is aiming at smaller companies that don't currently qualify for listing on the Nasdaq Stock Market or the New York Stock Exchange.

Issuers are a big source of business for exchanges, contributing 16% of NYSE Euronext's revenue in the third quarter of 2009 and 23% at Nasdaq OMX; listings also factor into market data income.

-By Jacob Bunge, Dow Jones Newswires; (312) 750-4117; jacob.bunge@dowjones.com

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