BATS Trading, the Kansas City-based ECN, is contemplating an expansion into the European equities market, said Dave Cummings, CEO of BATS Trading, in Monday’s e-mail to his subscribers.

After lying on a beach in Mexico last week reading “The World is Flat” by Thomas Friedman, Cummings was inspired by the book to think about globalization effects and the worldwide free flow of information via the Internet. So he decided to ask his readers – there are 1,500 people on his e-mail list – what they think about BATS expanding into Europe.

In fact, there were rumors in the British press that BATS was acquiring a stake in PlusMarkets Group (formerly known as Offex), whose stock spiked up, he noted in the e-mail. PLUSMarkets is a rival to the London Stock Exchange’s AIM, an international marketplace for smaller growing companies. Though Cummings wrote that he never heard of PLUSMarkets before reading the reports, “After Googling PLUSMarkets and reviewing their Web site, I realized the idea was not as crazy as I had originally thought.”

Cummings tells his readers he is open to speaking to PLUSMarkets if they are open to the idea and asks his readers to forward his e-mail to the company.

I actually met with Cummings two weeks ago in New York City, when he said he was “definitely keeping an eye on the European market. At some point we may launch a BATS Europe,” Cummings told Advanced Trading.

For the past year and a half, BATS has focused on gaining market share in U.S. stocks, targeting the Nasdaq Stock Market. As a result of its “January Effect” pricing promotion, ECN’s volume in February surpassed 300 million shares a day (about 13.9 percent of Nasdaq listed volume).

Cummings revealed that his board has asked the company to expand the depth of its management and to do multiple major projects at one time. “Europe is on the short list,” he says.

Other ECN-like players, including Instinet with Chi-x, and Project Turquoise, are developing alternative trading systems (ATSs) in Europe right now in preparations for The Markets in Financial Instruments Directive (MiFID), which supports competition between off-exchange platforms and traditional exchanges.

Cummings suggested he has some time since ATSs may take longer to develop over there than they have here in the U.S. He also noted that Chi-x has been called “the BATS of Europe” since it is also an ECN that is open to the broker-dealer community, and he plans to sell ownership stakes to the brokers as BATS has done in the U.S. Brokers that have taken equity ownership stakes in BATS include Credit Suisse, Lehman Brothers, Lime Brokerage, and Morgan Stanley. Today, BATS announced that Merrill Lynch has made a minority investment in the ECN operator whose volume averaged 307 million shares a day in February. In the release, Cummings said he looks forward to "additional partnerships with the trading community."

As for structuring a European strategy, in his e-mail Cummings lays out his thoughts and invites his readers to give feedback on each idea (A though G). For example, he envisions forming linkages with existing markets in Europe; licensing BATS technology to a market center in Europe; starting a wholly owned BATS subsidiary in Europe; or partnering with someone in Europe to create a cross-ownership relationship; among other ideas.

Cummings also wants readers to tell him if BATS should stay out of Europe and focus on other asset classes in the United States. If he missed anything, Cummings asks his audience “to think outside the box.” Those who submit the three best ideas will receive BATS’ bats, and, for a really good idea, a job offer is possible, too. And the job may not be in Kansas City. On March 1, BATS opened a New York City sales office, south of Time Square. Coincidentally, that’s not too far from Nasdaq’s Market Site headquarters.

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