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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on April 14, 2016

Registration No. 333-208565


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 4
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



BATS GLOBAL MARKETS, INC.
(Exact Name of Registrant as Specified in Its Charter)



DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)
  6200
(Primary Standard Industrial
Classification Code Number)
  46-3583191
(I.R.S. Employer
Identification Number)

8050 Marshall Drive, Suite 120
Lenexa, Kansas 66214
(913) 815-7000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)



Eric Swanson, Esq.
Executive Vice President, General
Counsel and Secretary
Bats Global Markets, Inc.
8050 Marshall Drive, Suite 120
Lenexa, Kansas 66214
(913) 815-7000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)



Copies to:

Deanna L. Kirkpatrick, Esq.
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
(212) 450-4000

 

Gregory A. Fernicola, Esq.
Phyllis G. Korff, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000

          Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

          If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

          If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o



               
 
Title of Each Class of Securities
to Be Registered

  Amount To Be
Registered(1)

  Proposed Maximum
Aggregate Offering
Price Per Share

  Proposed Maximum
Aggregate Offering
Price(2)

  Amount of
Registration Fee(3)

 

Common Stock, par value $0.01 per share

  15,295,000   $19.00   $290,605,000   $29,264

 

(1)
Includes 1,995,000 shares that the underwriters have the option to purchase.

(2)
Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act.

(3)
The Registrant has previously paid $24,644 of this amount in connection with the initial filing of the Registration Statement.

          The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS (Subject to Completion)

Issued April 14, 2016

13,300,000 Shares

LOGO

Bats Global Markets, Inc.

COMMON STOCK



        The selling stockholders of Bats Global Markets, Inc. identified in this prospectus are offering 13,300,000 shares of common stock. We will not receive any proceeds from the sale of common stock by the selling stockholders in this offering. This is the initial public offering of our shares, and no public market exists for our shares. We anticipate that the initial public offering price will be between $17.00 and $19.00 per share.

        Upon completion of this offering, our principal investors will collectively own approximately 79.7% of the total voting power of our capital stock. See "Principal and Selling Stockholders."

        We have applied to list the common stock on Bats BZX Exchange, Inc. (BZX) under the symbol "BATS."



        Investing in our common stock involves risks. See "Risk Factors" beginning on page 19.



PRICE $            A SHARE

       
 
 
  Per Share
  Total
 

Price to public

  $               $            
 

Underwriting discounts and commissions(1)

  $               $            
 

Proceeds to selling stockholders

  $               $            

 

(1)
We have agreed to reimburse the underwriters for certain expenses. See "Underwriters (Conflicts of Interest)."

        Certain of our selling stockholders named herein have granted the underwriters the option to purchase an additional 1,995,000 shares of common stock. The underwriters may exercise this option at any time within 30 days from the date of this prospectus.

        The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        The underwriters expect to deliver the shares of common stock to purchasers on                    , 2016.



Morgan Stanley   Citigroup

BofA Merrill Lynch                   Credit Suisse                   Goldman, Sachs & Co.                   J.P. Morgan

Jefferies                                    Barclays                         Deutsche Bank Securities                        Nomura                         Rosenblatt Securities            Sandler O'Neill + Partners, L.P.

                    , 2016


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TABLE OF CONTENTS



 
  Page  

Prospectus Summary

    1  

The Offering

    11  

Summary Historical and Pro Forma Financial and Operating Data

    13  

Risk Factors

    19  

Special Note Regarding Forward-Looking Statements

    51  

Recent Acquisitions

    52  

Unaudited Selected Pro Forma Financial Data

    54  

Use of Proceeds

    59  

Dividend Policy

    59  

Capitalization

    60  

Dilution

    61  

Selected Financial and Operating Data

    62  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    66  

Business

    118  

Regulation

    146  

Management

    158  

Executive Compensation

    166  

Certain Relationships and Related Transactions

    200  

Principal and Selling Stockholders

    204  

Description of Capital Stock

    209  

Material U.S. Federal Tax Considerations for Non-U.S. Holders

    217  

Shares Eligible for Future Sale

    220  

Underwriters (Conflicts of Interest)

    223  

Validity of Common Stock

    232  

Experts

    232  

Where You Can Find More Information

    232  

Glossary

    233  

Index to Consolidated Financial Statements

    F-1  

        We, the selling stockholders and the underwriters have not authorized anyone to provide you with any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We, the selling stockholders and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We, the selling stockholders and the underwriters are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, or other earlier date stated in this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

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PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus carefully, including the "Risk Factors" section and the financial statements and the notes to those statements included in this prospectus.

        In this prospectus, unless the context otherwise requires, "Bats," the "company," "we," "us" and "our" refer to Bats Global Markets, Inc. (or prior to the acquisition of Direct Edge Holdings LLC, or Direct Edge, in January 2014, Bats Global Markets Holdings, Inc.) and its consolidated subsidiaries: BZX, BYX, EDGX and EDGA (each, a national securities exchange), Bats Trading, Inc. (a U.S. broker-dealer), Bats Trading Limited (a U.K. operator of our multilateral trading facility and our Regulated Market, under its Recognised Investment Exchange status, and known as "Bats Europe"), Chi-X Europe Limited (a stand-alone U.K. broker-dealer) and Bats Hotspot (operator of our institutional spot foreign currency, or FX, market). We have defined certain industry-related and other terms in a glossary appended to this prospectus. Please see the glossary for our definition of "market share" and other terms.

Our Company

        We are a leading global operator of securities exchanges and other electronic markets enabled by world-class technology. We provide trade execution, market data, trade reporting, connectivity and risk management solutions to brokers, market makers, asset managers and other market participants, ultimately benefiting retail and institutional investors across multiple asset classes. Our principal objective is to improve markets by maximizing efficiency and mitigating trade execution risk for market participants. Our asset class focus currently comprises listed cash equity securities in the United States and Europe, listed equity options in the United States and institutional spot FX globally, as well as exchange-traded products, or ETPs, including exchange-traded funds, or ETFs, in the United States and Europe. Trade execution comprised 44.6% of our revenues less cost of revenues, and market data and connectivity, or non-transaction revenues, comprised 55.4% of our revenues less cost of revenues for the year ended December 31, 2015.

        We are the second largest exchange operator in U.S. listed cash equity securities trading by market share, the largest exchange operator of ETFs and other ETPs by market share, and the largest European exchange operator as measured by notional value traded as of December 31, 2015. In addition, for each of the six consecutive months ended December 31, 2015, excluding the Chinese exchanges, we were the largest equities market operator globally as measured by notional value traded. Moreover, during 2015 we operated the fastest growing market in the United States for exchange traded options as measured by market share.

        We improve markets by maximizing efficiency and mitigating trade execution risk, in part by offering low-cost, market-leading pricing and low-latency trade execution enabled by resilient and robust proprietary technology. For example, during the year ended December 31, 2015, our net capture, including auctions, in the U.S. equities market was approximately 42% of the rate reported by NASDAQ Group's U.S. equities operations and Intercontinental Exchange's New York Stock Exchange, or NYSE, operations, while our net capture, including auctions, in the European listed equity securities market was approximately 25% of the rate reported by the London Stock Exchange's European equities operations. During the year ended December 31, 2015, our net capture in the U.S. listed equity options market was 8% to 19% of the rate reported by the Chicago Board Options Exchange, or CBOE, NYSE Arca, NYSE MKT, NASDAQ Options Market and NASDAQ PHLX. We offer the same low-cost, market-leading pricing for our market data products. During the year ended December 31, 2015, our pricing for market data for the U.S. equities market was a combined $12,500 per month for data from BZX, BYX, EDGX and EDGA. This is approximately 8% of the prices reported by NYSE and NASDAQ operations to receive data for all of their respective markets during the same period.

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Our market data pricing in Europe was €59.50 per month for pan-European data during the year ended December 31, 2015. This is approximately 11% of the cost of receiving data from the other exchanges across Europe during the same period. Participants can also purchase our FX market data for $5,000 per month. This is approximately 8% of the price currently charged by EBS Market.

        We develop, own and operate the Bats trading platforms, which deploy our proprietary technology designed to offer some of the fastest and most reliable trading systems available. Our diverse exchange platforms are designed to facilitate price discovery by encouraging the quoting of competitive displayed, or lit, prices, but also offer opportunities to post undisplayed, or dark, trading interest on our U.S. and European order books. The core offerings and products driving our volume and leading market positions include:

    U.S. Listed Cash Equity Securities.  In the United States, we operate four national securities exchanges, BZX, BYX, EDGX and EDGA. All four Bats exchanges trade listed cash equity securities and ETPs, while offering different pricing alternatives. BZX also serves as a listing destination for ETPs.

    European Listed Cash Equity Securities.  In Europe, Bats Europe operates both a Multilateral Trading Facility, or MTF, and a Regulated Market, or RM, under its Recognised Investment Exchange, or RIE, status. Bats Europe operates two lit books, a periodic auctions book and two dark books on its MTF and operates one lit book and one dark book on its RM. On these books, we offer trading in listed cash equity securities from within 23 European indices and 15 major European markets, in addition to ETFs, exchange-traded commodities and international depositary receipts.

    U.S. Listed Equity Options.  In the United States, each of BZX and EDGX also operates a market for trading listed equity options.

    Global FX.  We operate separate New York and London area matching engines that offer access to trading in more than 60 currency pairs and gold and silver bullion.

        For the year ended December 31, 2015, we had a 21.1% share of the overall U.S. equity market, a 22.4% share of the trading of ETPs and a 9.6% share of the U.S. equity options market. In Europe, for the year ended December 31, 2015, we had a 24.4% share of European trading in the securities available for trading on Bats Europe. In addition, we had $25.8 billion average daily notional value, or ADNV, in our Global FX segment from the Bats Hotspot Acquisition on March 13, 2015 to December 31, 2015. Globally, for the year ended December 31, 2015, we had an 11.1% share of the publicly reported institutional spot FX market.

        For the two months ended February 29, 2016, we had a 21.4% share of the overall U.S. equity market, a 24.5% share of the trading of ETPs and a 10.2% share of the U.S. equity options market. For ETPs, during the two months ended December 31, 2015, we had 19 new listings, or 27.9% of all newly listed ETPs in the United States. During the two months ended February 29, 2016, we had 13 new listings, or 50.0% of all newly listed ETPs in the United States. We also had 69 total listings as of February 29, 2016, or 3.7% of all listings in the United States. In Europe, for the two months ended February 29, 2016, we had a 24.3% share of European trading in the securities available for trading on Bats Europe. In addition, for the two months ended February 29, 2016, we had $31.7 billion ADNV in our Global FX segment and 12.0% of the publicly reported institutional spot FX market.

        Our revenue consists primarily of transaction fees, regulatory fees, market data fees and port fees. On a consolidated basis, our revenues less cost of revenues were $384.4 million for the year ended December 31, 2015, which represents a 25.0% increase from the $307.5 million generated for the year ended December 31, 2014. Non-transaction revenues were 55.4% of revenues less cost of revenues for the year ended December 31, 2015. Adjusting for growth through acquisitions, our organic compound annual growth rate of revenues less cost of revenue for the last four years was 12.4%. For the year

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ended December 31, 2015, our Normalized EBITDA margin was 61.2%, compared to 54.7% for the year ended December 31, 2014. We use the non-GAAP measure of Normalized EBITDA margin to measure our performance. Normalized EBITDA margin is a non-GAAP measure that is reconciled to net income in the section titled "—Summary Historical and Pro Forma Financial and Operating Data."

Our History

        We were formed in 2005 as an alternative to the NYSE and the NASDAQ Stock Market, or NASDAQ, in response to increased consolidation among U.S. listed cash equity market centers. Since our founding, we have achieved the following milestones:

    January 2006: Launched our electronic communication network, or ECN, a type of alternative trading system, or ATS, which initially focused on the trading of NASDAQ-listed securities.

    May 2006: Began trading in American Stock Exchange (now NYSE MKT)-listed securities and, in February 2007, NYSE-listed securities.

    March 2008: Entered the European markets by launching an MTF to compete on a pan-European basis against the incumbent securities exchanges, formally launching Bats Europe in October 2008.

    November 2008: Converted our ECN to a national securities exchange, BZX, which allowed us to participate in, and earn market data fees from, the U.S. tape plans, reduce our clearing costs and operate a primary listings business.

    February 2010: Expanded into a new asset class by offering trading of listed equity options on BZX.

    October 2010: Launched BYX, a second national securities exchange for trading listed cash equity securities.

    November 2011: Acquired Chi-X Europe and it became a wholly-owned subsidiary.

    December 2011: Launched a primary listings business in the United States on BZX.

    May 2013: Received approval from the United Kingdom regulators to convert our pan-European MTF into an RIE, and in December 2013, Bats Europe acquired a 25% interest in European Central Counterparty N.V., or EuroCCP, the largest equities central clearing counterparty in Europe.

    January 2014: Acquired Direct Edge Holdings LLC, or the Direct Edge Acquisition, which included the two exchanges, EDGX and EDGA.

    March 2015: Acquired Hotspot FX Holdings, LLC, or the Bats Hotspot Acquisition, which owned KCG Hotspot FX LLC, the operator of an electronic trading platform for institutional spot FX, or the Bats Hotspot Platform.

    September 2015: Launched the Bats Hotspot Platform in London successfully.

    November 2015: Launched EDGX Options successfully.

    March 2016: Launched Bats-T3P SPY Volatility Index successfully.

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Industry Developments

        Significant regulatory and technological developments have transformed the markets in which we operate and have been the primary drivers of our growth and development:

    U.S. Listed Cash Equity Securities.  Several regulatory developments, together with innovations in technology and improvements in the speed of communication, have fundamentally changed the way U.S. listed cash equity markets operate. Notable developments that encouraged the creation of alternative markets, like our original ECN, included:

    the adoption of the "order handling" rules in 1996, which facilitated the growth of ECNs as alternatives to national securities exchanges for displaying and executing orders;

    the adoption of Regulation ATS in 1998, which provides an exemption from exchange registration for ATSs that comply with certain conditions;

    the move to decimal pricing in 2000, which resulted in narrower trading spreads, providing automated market makers with an advantage over traditional market makers; and

    the adoption of Regulation NMS in 2005, which provided price protection for each exchange's best displayed quotes that are electronically accessible for immediate trade execution, and resulted in a dramatic shift to electronic trading as exchanges automated their trading systems to take advantage of this price protection.

    European Listed Cash Equity Securities.  The implementation of the Market in Financial Instruments Directive, or MiFID, in 2007 marked a fundamental change in the European market for trading listed cash equity securities. MiFID was designed to increase competition in pan-European trading and authorized the creation of MTFs. In particular, to create competition among markets, MiFID abolished the "concentration rule," which required firms to route orders only to national stock exchanges, and extended the concept of "passporting," which allowed firms authorized to carry on business in one European Economic Area, or EEA, member state to carry on business in other EEA member states.

    U.S. Listed Equity Options.  The most significant changes within the U.S. listed equity options market have been the move to penny-increment price quotes for many options and the shift away from the traditional pricing model, pursuant to which both sides pay a fee, for executing trades to a pricing model common in the U.S. listed cash equities market. We believe these changes have contributed to significant growth in overall options market volume and have encouraged more aggressive competition and better price discovery.

    Global FX.  While the global institutional spot FX market remains largely unregulated, the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank, and its related regulations in the United States and the ongoing implementation of the Market in Financial Instruments Directive II, or MiFID II, and Markets in Financial Instruments Regulation, or MiFIR, in Europe have impacted the regulatory landscape for currency derivative products. For example, certain standardized currency derivative products are expected to be required to trade on an organized trading venue such as a swap execution facility, or SEF, or designated contract market, or DCM, in the United States or on an MTF or organized trading facility, or OTF, in Europe. Trading on these venues has also been enabled by technological developments that facilitate the electronic trading of spot FX and currency derivatives.

    Shifting Investment Styles.  Investors are allocating increasing amounts of capital to passive investment products, such as ETPs, and are seeking exposure to a wider range of asset classes. Passive investment products have proliferated due to investor demand for transparency, lower

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      costs and greater liquidity. We believe these trends will persist, generating significant growth opportunities for our product offerings.

    Continued Customer Need for Data/Risk Management Offerings.  New global regulations are driving not only increased electronic trading but also higher capital requirements, enhanced risk management and reporting and compliance requirements. In addition, regulations are driving market participants to gather more timely, relevant and complete data to improve transparency. With these new regulations, and as regulatory authorities globally continue to establish stricter standards, we believe our customers will continue to strengthen their compliance capabilities, manage greater volumes of data and improve their risk functions.

Our Competitive Strengths

        As a result of these industry developments, newer trading centers like ours are better able to compete against competing exchanges based on technology, price and customer experience. We believe that the following competitive strengths position us well to capitalize on these industry dynamics:

    Leading and Attractive Market Positions.  We are a leading global operator of securities exchanges and other electronic markets and have an attractive market share in the markets we serve. In U.S. listed cash equities, we are the second largest exchange operator, with a market share of 21.1% of the overall U.S. equity market for the year ended December 31, 2015. Our U.S. exchanges also execute the largest share of trading in ETPs, including ETFs and exchange-traded notes, with a 22.4% share of the trading of ETPs for the year ended December 31, 2015. In European listed equities, we execute the largest notional value of pan-European equities traded by a single market operator RIE, with a market share of 24.4% of European trading in the securities available for trading on Bats Europe for the year ended December 31, 2015. In addition, we have a substantial presence in the FX markets with our recent Bats Hotspot Acquisition, with a 11.1% market share of the publicly reported institutional spot FX market for the year ended December 31, 2015. The combination of our attractive market positions, the quality of our markets and the expertise of our teams have enabled us to grow our market share across our markets over the last four years.

    Leading Proprietary Technology Platform.  We develop, own and operate a proprietary technology platform, which we designed to optimize reliability, speed, scalability and versatility across all of our markets.

    Our trading platforms have experienced very low operational downtime, as demonstrated by the fact that for the years ended December 31, 2015 and 2014, all of our global markets were immediately and automatically accessible (i.e., fully operational) 99.994% and 99.991% of the time, respectively. For the year ended December 31, 2015, five of our eight global platforms were fully operational 100% of the time. We believe that this reliability gives our customers an additional incentive to use our platforms to mitigate trade execution risk, especially in times of extreme market volatility. Including our two Hotspot platforms, we either launched or moved data centers for eight of our ten trading platforms in 2015 with no significant operational downtime.

    We use the same technology platform across all of our equities and options markets, which optimizes efficiency, versatility, resiliency and scalability and maximizes uniformity of customer experience. We acquired an additional proprietary trading platform with the Bats Hotspot Acquisition in March 2015, and we are evaluating its migration to our existing Bats technology platform in the coming years. In order to continuously implement new enhancements to our trading platforms, new software releases are deployed to our markets multiple times per month.

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      Our average latency, which measures the time that it takes for us to process an order message, has decreased 94% from over 930 microseconds in January 2007 to approximately 57 microseconds for the year ended December 31, 2015.

    Highly Attractive Operating Model.  The scalability of our technology platforms and the efficiency of our operations allow us to continue to grow with limited additional capital investment. We use technology to leverage our products and employees across multiple asset classes and geographies. As a result, we are able to operate with lower overhead than many competing exchanges. In addition, unlike competing exchanges, we are not burdened by legacy infrastructure. With 286 employees globally as of December 31, 2015, we have captured substantial market share from traditional exchanges in the United States and Europe while maintaining substantially lower fixed costs. This scalability and our low cost structure have driven our Normalized EBITDA margin to 61.2% for the year ended December 31, 2015, compared to 54.7% for the year ended December 31, 2014. Along with the substantial amount of non-transactional revenue we generate, our operating leverage provides us with opportunities to continuously improve our operating margins and generate significant operating cash flows.

    Commitment to Competitive and Market-leading Pricing.  Due to our operating leverage, we are able to profitably employ an aggressive, low-spread pricing strategy, which we believe provides us with an important competitive advantage. In addition, we have employed market-leading, and in some cases, disruptive pricing strategies to increase our market share and improve net capture across our markets.

    Proven Ability to Rapidly Execute on Market Opportunities.  Since our inception, we have demonstrated a unique ability to efficiently expand into new products and new markets, through our effective navigation of dynamic regulatory environments and our identification and successful execution of transformational acquisitions. We do so by leveraging our vast industry expertise and through a continuous dialogue with regulators and key market participants. For example:

    we launched trading in the United States within seven months of our initial incorporation, executed our first trades in the European market within seven months of receiving board approval, began trading listed equity options within eight months of receiving board approval and launched our first ETF listings within three months of receiving final approval from the Securities and Exchange Commission, or the SEC;

    we successfully executed the transformational acquisitions of Chi-X Europe, Direct Edge and Hotspot in 2011, 2014 and 2015, respectively, in an effort to accelerate our expansion into new products and geographies. Our rapid integration of these businesses and our realization of synergies from them have strengthened our competitive position and improved our financial results; and

    with the Chi-X Europe acquisition in 2011, we have realized approximately $14 million in annualized synergies through December 31, 2012. With the Direct Edge Acquisition, we have realized approximately $28 million in annualized synergies through December 31, 2015, and with the Hotspot Acquisition, we have realized approximately $4 million in annualized synergies through December 31, 2015. We expect to realize an additional $19 million and $5 million in annualized synergies through December 31, 2016 from the Direct Edge and Hotspot Acquisitions, respectively. For additional information on the realized and expected synergies, see "Management's Discussion and Analysis of Financial Condition and Results of Operation—Acquisition Synergies".

    Unique Partnership-Driven Product Design and Delivery.  We are structured and committed to deliver a differentiated experience to our customers, through our offering of innovative order types, risk management tools and other products and services. In part due to our strong

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      relationships with our principal investors and their affiliates, we benefit from access to the strategic insights and industry expertise of some of the most active market participants. For example, we offer several products that enable our customers to monitor their order handling on our markets in real-time, such as our user dashboard and latency reports, both of which are web-based tools designed to provide customers with real-time information about their connectivity to our platform and the speed at which their orders are processed and executed within our markets. We also operate one of the few market centers in Europe that offers routing services to other venues that publicly display quotes, or lit venues, which we believe provides an added incentive to use our market. Additionally, EDGX has typically been the preferred exchange destination for retail limit orders as we provide a service model for the retail trading community's unique needs, competitive rates and a general advocacy and support for retail investors.

    Seasoned Management Team with a Core Focus on Technology.  Our management team has extensive experience in financial market operations with a strong background in technology. In addition, a significant portion of our management team has worked together for several years, and several of our founding employees continue to be employed with us. We believe that our management team has demonstrated its ability to grow our business through continued product and technological innovations and that our team of technology professionals is among the best in the industry.

Our Growth Strategies

        We believe that we are well positioned to leverage our competitive strengths to enhance our market position, develop new products and services and continue expanding into new asset classes and geographies. We continually analyze new opportunities and, in particular, intend to pursue the following growth strategies:

    Increase Penetration in U.S. Options with New Products and Services.  We believe there are significant opportunities to generate additional revenue from U.S. listed options by expanding the functionality and pricing models available on our exchanges to attract order flow from new customer segments. In November 2015, we launched our second options exchange, EDGX Options, with a customer-priority, "pro rata" market model as a complement to our existing BZX Options exchange featuring a price-time-priority model. We intend to compete in the larger "pro rata" segment of the options market with EDGX by offering very competitive pricing, a robust technology platform and superior customer service. We plan to develop new functionality on the platform to specifically target more marketable flow from retail customers, more auction flow and growing complex order flow from institutional investors. In addition, we are continuing to explore the development of index and other higher-margin proprietary options products to trade on our exchanges.

    Expand Global FX Platform into Other Currency Instruments.  In March 2015, we acquired the Bats Hotspot Platform, which expanded our reach into foreign currency, the world's largest asset class. We believe the September 2015 launch of the Bats Hotspot matching engine in the United Kingdom will provide us with better access to Asian- and European-based customers and therefore allow us to compete more directly against other platforms in London, the center of global FX trading. We also intend to leverage this expanded footprint in institutional spot FX trading to offer Bats Hotspot customers other non-spot FX instruments such as forwards, swaps and options that make up the majority of the over $5 trillion in global daily notional value traded. As regulatory and other structural changes continue to evolve in the FX industry, we intend to enhance our offering to support additional automation and algorithmic trading, enhance client workflow and execution quality and increase penetration into new customer segments.

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    Grow U.S. Equities by Leveraging Position in ETPs to Expand Listings.  We were the number one market by volume for ETP trading for every month of 2015 while remaining the number two U.S. market by volume for overall listed cash equity trading during the same period. We believe this trading market share leadership can be used to attract new ETP listings to Bats or transfers to Bats of existing ETPs listed on other exchanges in both the United States and Europe. In addition to generating more revenues from increased trading volume in ETPs during the trading day, we believe listing ETPs offers us the opportunity to generate higher-margin fees from opening and closing auctions, as well as value-added market data and analytics. In Europe, we intend to capitalize on expected changes to regulatory transparency requirements that can encourage ETP trading to migrate from the more opaque over-the-counter, or OTC, market to regulated exchange markets like Bats Europe. We also expect continued global industry expansion in ETP launches, trading volumes and assets, which we hope will create additional opportunities for us to serve issuers, liquidity providers and investors.

    Fully Monetize the Value of Market Data and Connectivity.  As market share and volumes on our exchanges and trading platforms continue to rise, we believe that additional proprietary market data, analytics and connectivity revenues can be generated while continuing to be a leader on price versus competing platforms across all of our segments. In our Global FX segment, we are considering introducing market data products and connectivity fees to our Bats Hotspot Platform. In Europe, we intend to leverage our position as the leading exchange and OTC reporting facility to use our market data to develop indices and other information services.

    Pursue Strategic Opportunities.  We intend to seek additional opportunities to grow through strategic alliances or acquisitions that are complementary to our business or that enable us to enter new markets or provide new products or services. Our focus will be on opportunities that we believe can enhance or benefit from our technology platform, offer significant cost synergies and operational efficiencies and are consistent with our corporate culture. We believe that the establishment of a public trading market for our common stock will enhance our ability to pursue strategic opportunities by providing a currency with which to execute future acquisitions.

Recent Developments

        In March 2016, we agreed to acquire ETF.com, a leading provider of ETF data, news and analysis, which had approximately $3.0 million in annual revenue for 2015. The transaction closed on April 1, 2016.

        In March 2016, together with T3Index, a research-driven financial indexing firm, we launched the Bats-T3P SPY Volatility Index, or SPYIX, an index measuring expected 30-day volatility in the most actively traded security worldwide, the SPDR S&P 500 ETF, or SPY. The SPYIX is calculated using prices from highly-active, electronically-traded multiple-listed SPY options, which we believe to be an improvement over the slower, manually-traded, floor-based S&P 500 index options used to calculate other volatility benchmarks. SPYIX also includes important features designed to enhance critical stability during periods of low liquidity in the market, namely its proprietary "price-dragging" technique which helps reduce erratic movements in the index.

        In February 2016, we unveiled an updated corporate brand, including a new logo and naming conventions, all developed in-house by Bats associates. We expect the project will cost approximately $350,000 to fully implement. It is anticipated that the rebrand will be completed on or around April 30, 2016.

        In November 2015, we launched our second options exchange, EDGX Options, with a customer priority, "pro rata" market model as a complement to our existing BZX Options exchange featuring a price-time-priority model. See "Management's Discussion and Analysis of Financial Condition and Results of Operation—Our Model" for further information on our pricing models.

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        In October 2015, we launched in the United States "The Bats ETF Marketplace," a market specifically structured and designed for ETF issuers and their investors, introducing the Bats ETP Issuer Incentive Program and the Bats Lead Market Maker, or LMM, Program. The Bats ETP Issuer Incentive Program is an innovative program that rewards issuers as their ETP listings grow on BZX. Traditionally, ETP issuers have paid an annual exchange fee to the listing venue that increases as the product becomes more successful. The Bats ETP Issuer Incentive Program rewards ETP issuers for their product's success with a rebate based on the product's consolidated average daily volume, or CADV. The Bats LMM Program is a rewards-based program that incentivizes market makers for their participation in BZX-listed ETPs. First, LMMs receive larger incentives for providing liquidity and reduced costs for removing liquidity in their assigned ETPs. Second, LMMs receive additional economic incentives for making markets in additional ETP products listed on Bats. The Bats LMM Program is supplemented by Bats' Competitive Liquidity Provider, or CLP, program, which is also a rewards-based program designed to incent market makers to make tighter quote spreads with increased liquidity for BZX-listed ETPs.

Reclassification and Stock Split

        Immediately prior to the completion of this offering, we intend to reclassify each share of our existing capital stock designated as Class A non-voting common stock as one share of common stock. We also intend to reclassify each share of our existing capital stock designated as Class B non-voting common stock as one share of non-voting common stock. In addition, immediately following the stock reclassification described above and prior to the completion of this offering, we intend to declare a 1-for-2.91 stock split of all outstanding common stock and non-voting common stock. See "Description of Capital Stock."

Risk Factors

        Investing in our common stock involves substantial risk. Please read "Risk Factors" beginning on page 19 for a discussion of certain factors you should consider in evaluating an investment in our common stock. Some of these risks include:

    intense competition, including price competition, with a broad range of market participants globally, including our principal investors, and further consolidation and alliances among our securities trading competitors could impair our competitive position;

    market data fees and net transaction fees may be reduced due to declines in our market share, trading volumes or regulatory changes, and our lack of revenue diversification, which may adversely affect our operating results and place us at a competitive disadvantage;

    revenues are positively correlated with overall market volume, which can be adversely impacted by a number of factors, including market prolonged diminished volatility;

    system limitations, failures or security breaches could harm our business;

    regulatory changes and changes in market structure, which could have a material adverse effect on our business and that of many of our clients;

    a significant percentage of our total revenues that is generated from, and significant liquidity in our markets that is provided by, customers who are affiliates of our principal investors, who are not contractually obligated to continue to use our services or purchase our products and who also use the services of our competitors;

    control of us by our principal investors, who upon completion of this offering will collectively own approximately 79.7% of the total voting power of our outstanding capital stock and, to the extent that they vote similarly, will be able, by virtue of their ability to elect our board of

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      directors, to control our policies and operations and may have interests that differ from those of other stockholders; and

    we may have difficulty executing our growth strategy and managing our growth effectively.

Principal Investors

        Immediately prior to this offering, thirteen affiliates of our customers, as well as International Securities Exchange Holdings, Inc. (owned by Deutsche Börse), or ISE, and BGM Holding, L.P. and its affiliates, collectively owned 77,904,035 shares of our common stock and 12,152,158 shares of non-voting common stock, representing approximately 93.3% of the total voting power of our capital stock. We refer to these investors as our "principal investors." Upon completion of this offering, our principal investors will collectively own approximately 70,003,838 shares of our common stock and 7,877,756 shares of non-voting common stock, representing approximately 79.7% of the total voting power of our capital stock. See "Principal and Selling Stockholders." These principal investors are affiliates of Bank of America Merrill Lynch, Citadel, Citigroup, Credit Suisse, Deutsche Bank Securities, Goldman Sachs, Instinet, J.P. Morgan, KCG, Lime, Morgan Stanley, Tradebot Ventures and WEDBUSH.

Conflicts of Interest

        Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup, Goldman, Sachs & Co., Jefferies LLC and Nomura Securities International, Inc., underwriters of this offering, or their affiliates (as defined in FINRA Rule 5121), will each receive more than 5% of net offering proceeds and will have a "conflict of interest" pursuant to the Financial Industry Regulatory Authority, or FINRA, Rule 5121(f)(5)(C)(ii). Accordingly, this offering will be made in compliance with the applicable provisions of FINRA Rule 5121. As such, any underwriter that has a conflict of interest pursuant to FINRA Rule 5121 will not confirm sales to accounts in which it exercises discretionary authority without the prior written consent of the customer. Pursuant to FINRA Rule 5121, a "qualified independent underwriter" (as defined in FINRA Rule 5121) must participate in the preparation of the prospectus and perform its usual standard of due diligence with respect to the prospectus. Sandler O'Neill & Partners, L.P. has agreed to act as qualified independent underwriter for the offering and to perform a due diligence investigation and review and participate in the preparation of the prospectus. See "Underwriters (Conflicts of Interest)."

Corporate Information

        BATS Global Markets Holdings, Inc. was incorporated in Delaware in August 2013. In connection with the Direct Edge Acquisition, BATS Global Markets Holdings, Inc. changed its name to BATS Global Markets, Inc. and became a single new holding company. Concurrently, Direct Edge and BATS Global Markets, Inc. (which was renamed BATS Global Markets Holdings, Inc.) each became intermediate holding companies held by the new BATS Global Markets, Inc. Direct Edge was dissolved on December 31, 2015. In February 2016, BATS Global Markets, Inc. changed its name to Bats Global Markets, Inc., and BATS Global Markets Holdings, Inc. changed its name to Bats Global Markets Holdings, Inc.

        We are headquartered in the Kansas City area with additional offices in New York, London, Chicago and Singapore. Our principal executive offices are located at 8050 Marshall Drive, Suite 120, Lenexa, Kansas 66214, and our telephone number is (913) 815-7000. Our website is www.bats.com. Information contained on or accessible from our website is not incorporated by reference into this prospectus.

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THE OFFERING

Common stock offered by the selling stockholders

  13,300,000 shares

Capital stock outstanding after this offering:

 

 

Common stock

 

87,699,410 shares

Non-voting common stock(1)

 

7,980,017 shares

Total

 

95,679,427 shares

Option to purchase additional common stock

 

Certain of our selling stockholders have granted the underwriters the option to purchase an additional 1,995,000 shares. The underwriters may exercise this option at any time within 30 days from the date of this prospectus.

Voting rights:

 

 

Common stock

 

One vote per share

Non-voting common stock

 

Only as required by applicable law

Use of proceeds

 

We will not receive any proceeds from the sale of our common stock by the selling stockholders in this offering, including any shares sold by certain of the selling stockholders in connection with the exercise of the underwriters' option to purchase additional shares. See "Use of Proceeds."

Dividend policy

 

The board of directors is expected to adopt a policy with respect to the payment of dividends on our capital stock following this offering. We currently expect that we will pay quarterly cash dividends following the offering, with the annual amount initially determined based on a payout ratio of earnings within a range of 30-40% of net income. Notwithstanding the current expectations for our future dividend policy, the timing, declaration, amount and payment of any dividends are within the discretion of the board of directors and will depend upon many factors, including our financial condition, earnings, corporate strategy, debt covenants, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by the board of directors.

BZX symbol

 

BATS

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Conflicts of interest

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup, Goldman, Sachs & Co., Jefferies LLC and Nomura Securities International, Inc., underwriters of this offering, or their affiliates (as defined in FINRA Rule 5121), will each receive more than 5% of net offering proceeds and will have a "conflict of interest" pursuant to FINRA Rule 5121(f)(5)(C)(ii). Accordingly, this offering will be made in compliance with the applicable provisions of FINRA Rule 5121. As such, any underwriter that has a conflict of interest pursuant to FINRA Rule 5121 will not confirm sales to accounts in which it exercises discretionary authority without the prior written consent of the customer. Pursuant to FINRA Rule 5121, a "qualified independent underwriter" (as defined in FINRA Rule 5121) must participate in the preparation of the prospectus and perform its usual standard of due diligence with respect to the prospectus. Sandler O'Neill & Partners, L.P. has agreed to act as qualified independent underwriter for the offering and to perform a due diligence investigation and review and participate in the preparation of the prospectus. See "Underwriters (Conflicts of Interest)."


(1)
Shares of non-voting common stock are convertible into common stock at the option of the holder in connection with any "qualified transfer." See "Description of Capital Stock."

        Unless the context requires otherwise, all references to the number of shares of our common stock and non-voting common stock to be outstanding after this offering are based on the number of shares outstanding as of December 31, 2015 and give effect to our reclassification and stock split to be consummated immediately prior to the completion of this offering, as described under "—Reclassification and Stock Split," and 887,778 shares of unvested restricted stock as of December 31, 2015, but exclude:

    an aggregate of 688,226 shares of unvested restricted stock issued after December 31, 2015;

    1,946,038 shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2015 with a weighted average exercise price of $8.65 per share; and

    an aggregate of 6,984,754 shares of common stock reserved for future issuance under our equity incentive plans as of December 31, 2015.

        Unless otherwise indicated, all information in this prospectus assumes that the underwriters do not exercise their option to purchase up to 1,995,000 additional shares of common stock from certain of the selling stockholders named herein.

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA

        The following summary historical and pro forma financial and operating data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," the unaudited pro forma financial statements and the accompanying notes, and the consolidated financial statements and the accompanying notes, in each case included elsewhere in this prospectus. We have derived the summary consolidated statements of operations data for the years ended December 31, 2015, 2014 and 2013 and the statements of financial condition data as of December 31, 2015 and 2014 from our audited consolidated financial statements and related notes included elsewhere in this prospectus. We have derived the statement of financial condition data as of December 31, 2013 from our audited consolidated financial statements and related notes which are not included in this prospectus.

        We have derived the summary unaudited pro forma consolidated statements of operations data for the year ended December 31, 2015 from the unaudited pro forma condensed combined financial statements and related notes included in this prospectus. The unaudited pro forma condensed combined statement of operations is intended to provide information about how the Bats Hotspot Acquisition might have affected our historical statement of operations if it had been consummated as of January 1, 2015. The following unaudited pro forma condensed combined statement of operations is provided for informational purposes only and does not necessarily reflect the results of operations that would have actually resulted had the Bats Hotspot Acquisition occurred as of January 1, 2015, nor should it be taken as necessarily indicative of our future results of operations.

 
  Year Ended December 31,  
 
  Pro Forma
2015(1)
  2015   2014   2013  
 
  (in millions, except share and per share data)
 

Consolidated Statements of Operations Data:

                         

Revenues:

                         

Transaction fees

  $ 1,299.2   $ 1,290.2   $ 1,009.9   $ 612.8  

Regulatory transaction fees(2)

    275.7     275.7     272.0     127.4  

Market data fees

    131.0     131.0     110.3     59.4  

Port fees and other

    81.9     81.8     66.0     41.9  

Total revenues

    1,787.8     1,778.7     1,458.2     841.5  

Cost of revenues:

                         

Liquidity payments

    1,070.7     1,070.7     831.4     474.7  

Section 31 fees(2)

    275.7     275.7     272.0     127.4  

Routing and clearing

    47.9     47.9     47.3     42.6  

Total cost of revenues

    1,394.3     1,394.3     1,150.7     644.7  

Revenues less cost of revenues

    393.5     384.4     307.5     196.8  

Operating expenses:

                         

Compensation and benefits

    83.5     79.7     87.0     41.5  

Other operating expenses

    123.0     122.4     100.9     53.7  

Total operating expenses

    206.5     202.1     187.9     95.2  

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  Year Ended December 31,  
 
  Pro Forma
2015(1)
  2015   2014   2013  
 
  (in millions, except share and per share data)
 

Operating income

    187.0     182.3     119.6     101.6  

Interest expense and other

    (46.4 )   (43.6 )   (39.3 )   (26.0 )

Income before income tax provision

    140.6     138.7     80.3     75.6  

Income tax provision

    57.3     56.5     31.1     28.8  

Net income

  $ 83.3   $ 82.2   $ 49.2   $ 46.8  

Earnings per share(3):

                         

Basic

        $ 2.53   $ 1.56   $ 2.07  

Diluted

        $ 2.51   $ 1.55   $ 2.06  

Pro forma earnings per share(4):

                         

Basic

  $ 2.56     *     *     *  

Diluted

  $ 2.55     *     *     *  

Pro forma as adjusted earnings per share(5):

                         

Basic

  $ 0.88       *     *     *

Diluted

  $ 0.88       *     *     *

Weighted average shares outstanding(3):

                         

Basic

          32.5     31.6     22.6  

Diluted

          32.7     31.8     22.7  

Pro forma weighted average common shares outstanding(4):

                         

Basic

    32.5     *     *     *  

Diluted

    32.7     *     *     *  

Pro forma as adjusted weighted average common shares outstanding(5):

                         

Basic

    94.6       *     *     *

Diluted

    95.2       *     *     *

Distributions per share

  $   $   $ 7.82   $  

*
Not meaningful

(1)
Represents the effects of the Bats Hotspot Acquisition as if it had occurred on January 1, 2015. All acquisition related costs directly attributable to the transaction, such as fees to investment bankers, attorneys, accountants and other professional advisors and severance to employees are reflected as pro forma adjustments to derive pro forma net income. The pro forma adjustments do not reflect any cost savings or synergies we expect to realize after we integrate Bats Hotspot's operations.

(2)
As national securities exchanges, BZX, BYX, EDGX and EDGA are assessed fees pursuant to Section 31 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Section 31 fees are assessed on the notional value traded and are designed to recover the costs to the government of supervision and regulation of securities markets and securities professionals. Section 31 fees are paid directly to the SEC, and our national securities exchanges then pass these costs along to our members as regulatory transaction fees, recognizing these amounts as incurred in cost of revenues and revenues, respectively.

(3)
Does not give effect to our reclassification and 1-for-2.91 stock split to be consummated immediately prior to the completion of this offering.

(4)
On a pro forma basis to give effect to the Bats Hotspot Acquisition. Does not give effect to our reclassification and 1-for-2.91 stock split to be consummated immediately prior to the completion of this offering.

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(5)
On a pro forma as adjusted basis to give effect to the Bats Hotspot Acquisition and to give further effect to our reclassification and 1-for-2.91 stock split to be consummated immediately prior to the completion of this offering.

 
  As of December 31,  
 
  2015   2014   2013  
 
  (in millions)
 

Consolidated Statements of Financial Condition Data:

                   

Cash and cash equivalents

  $ 75.1   $ 122.2   $ 87.2  

Financial investments

    47.7     68.4     25.2  

Goodwill and intangible assets, net

    980.3     598.2     247.0  

Total assets

    1,316.9     1,006.6     456.9  

Total liabilities

    937.0     702.4     316.9  

Long-term debt

    687.5     474.4     246.0  

Stockholders' equity

    379.9     304.2     140.0  

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Selected Operating Data

        The following table presents selected operating data for our four segments: U.S. Equities, European Equities, U.S. Options and Global FX for the periods presented. The information set forth below is not necessarily indicative of our future operations and should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations."

 
  Year Ended December 31,  
 
  2015   2014   2013  
 
  (in millions except for trading
days, earnings per share,
percentages and as noted below)

 

U.S. Equities:

                   

Average daily volume (ADV) (in billions of shares):

                   

Matched shares

    1.5     1.2     0.6  

Routed shares

    0.1     0.1     0.1  

Total touched shares

    1.6     1.3     0.7  

Market ADV

    6.9     6.4     6.2  

Number of trading days

    252     252     252  

Net capture per one hundred touched shares(1)

  $ 0.021   $ 0.022   $ 0.024  

Market share(2)

    21.1 %   19.4 %   10.4 %

European Equities:

                   

Average daily notional value (ADNV) (in billions):

                   

Matched and touched

  12.4   8.6   7.5  

Market ADNV

  50.8   39.7   32.6  

Number of trading days

    257     256     256  

Net capture per matched notional value (in basis points)(1)

    0.133     0.162     0.167  

Market share(2)

    24.4 %   21.6 %   23.1 %

U.S. Options:

                   

ADV (in millions of contracts):

                   

Matched contracts

    1.5     0.8     0.6  

Routed contracts

    0.1          

Total touched contracts

    1.6     0.8     0.6  

Market ADV

    16.1     16.6     15.9  

Number of trading days

    252     252     252  

Net capture per touched contract(1)

  $ 0.030   $ 0.046   $ 0.058  

Market share(2)

    9.6 %   4.8 %   3.7 %

Global FX:

                   

ADNV (in billions)

  $ 25.8       *     *

Number of trading days

    209       *     *

Net capture per one million dollars traded(1)

  $ 2.95       *     *

Other Data:

                   

EBITDA(3)

  $ 226.1   $ 136.0   $ 116.6  

EBITDA margin(4)

    58.8 %   44.2 %   59.2 %

Normalized EBITDA(3)

  $ 235.3   $ 168.1   $ 124.1  

Normalized EBITDA margin(5)

    61.2 %   54.7 %   63.1 %

Pro Forma EBITDA(3)

  $ 233.1       *     *

Pro Forma EBITDA margin(6)

    59.2 %     *     *

Adjusted earnings(7)

  $ 103.6   $ 75.2   $ 55.1  

Adjusted earnings margin(8)

    27.0 %   24.5 %   28.0 %

Diluted Adjusted earnings per share(9)

  $ 3.17   $ 2.37   $ 2.42  

Non-transaction revenue as a percentage of revenues less cost of revenues

    55.4 %   57.3 %   51.5 %

Capital expenditures

  $ 13.9   $ 25.2   $ 3.6  

*
Not meaningful.

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(1)
Please see the glossary for our definitions of "net capture per one hundred touched shares," "net capture per matched notional value," "net capture per touched contract" and "net capture per one million dollars traded."

(2)
Please see the glossary for our definition of "market share."

(3)
"EBITDA" is defined as income before interest, income taxes, depreciation and amortization. Normalized EBITDA is defined as EBITDA before acquisition-related costs, initial public offering, or IPO, costs, loss on extinguishment of debt, debt restructuring costs, intangible asset impairment charges, gain on extinguishment of revolving credit facility and an unusually large regulatory assessment charged to a member in 2013. Pro Forma EBITDA is defined as EBITDA before costs related to the Bats Hotspot Acquisition, had such acquisition been completed on January 1, 2015. EBITDA, Normalized EBITDA and Pro Forma EBITDA do not represent, and should not be considered as, alternatives to net income or cash flows from operations, each as determined in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. We have presented EBITDA, Normalized EBITDA and Pro Forma EBITDA because we consider them important supplemental measures of our performance and believe that they are frequently used by analysts, investors and other interested parties in the evaluation of companies. In addition, we use Normalized EBITDA as a measure of operating performance for preparation of our forecasts, evaluating our leverage ratio for the debt to earnings covenant included in our outstanding credit facility and calculating employee and executive bonuses. Other companies may calculate EBITDA, Normalized EBITDA and Pro Forma EBITDA differently than we do. EBITDA, Normalized EBITDA and Pro Forma EBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP.

    The following is a reconciliation of net income to EBITDA, Normalized EBITDA and Pro Forma EBITDA:

 
  Year Ended December 31,  
 
  2015   2014   2013  
 
  (in millions)
 

Net income

  $ 82.2   $ 49.2   $ 46.8  

Interest

    46.6     27.3     25.8  

Income tax provision

    56.5     31.1     28.8  

Depreciation and amortization

    40.8     28.4     15.2  

EBITDA

    226.1     136.0     116.6  

Acquisition-related costs

    8.2     18.5     5.2  

IPO costs

    1.5         0.6  

Loss on extinguishment of debt

        13.6      

Impairment of intangible assets

            3.5  

Debt restructuring

    0.5          

Gain on extinguishment of revolving credit facility

    (1.0 )        

Regulatory assessment

            (1.8 )

Normalized EBITDA

  $ 235.3   $ 168.1   $ 124.1  

 

 
  Year Ended
December 31,
2015
 
 
  (in millions)
 

Pro forma net income

  $ 83.3  

Pro forma interest

    48.4  

Pro forma income tax provision

    57.3  

Pro forma depreciation and amortization

    44.1  

Pro Forma EBITDA

  $ 233.1  
(4)
EBITDA margin represents EBITDA divided by revenues less cost of revenues.

(5)
Normalized EBITDA margin represents Normalized EBITDA divided by revenues less cost of revenues.

(6)
Pro Forma EBITDA margin represents Pro Forma EBITDA divided by pro forma revenues less cost of revenues.

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(7)
"Adjusted earnings" is defined as net income adjusted for amortization, net of tax and other items, including acquisition-related costs, IPO costs, loss on extinguishment of debt, gain on extinguishment of revolving credit facility, debt restructuring costs, intangible asset impairment charges and an unusually large regulatory assessment charged to a member in 2013, net of tax. Adjusted earnings does not represent, and should not be considered as, an alternative to net income, as determined in accordance with U.S. GAAP. We have presented Adjusted earnings because we consider it an important supplemental measure of our performance and we use it as the basis for monitoring our own core operating financial performance relative to other operators of electronic exchanges. We also believe that it is frequently used by analysts, investors and other interested parties in the evaluation of companies. We believe that investors may find this non-GAAP measure useful in evaluating our performance compared to that of peer companies in our industry. Other companies may calculate Adjusted earnings differently than we do. Adjusted earnings has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

    The following is a reconciliation of net income to Adjusted earnings:

 
  Year Ended December 31,  
 
  2015   2014   2013  
 
  (in millions)
 

Net income

  $ 82.2   $ 49.2   $ 46.8  

Amortization

    26.9     10.3     5.9  

Tax effect of amortization

    (11.0 )   (4.0 )   (2.2 )

Acquisition-related costs

    8.2     18.5     5.2  

IPO costs

    1.5         0.6  

Loss on extinguishment of debt

        13.6      

Impairment of intangible assets

            3.5  

Debt restructuring

    0.5          

Gain on extinguishment of revolving credit facility

    (1.0 )        

Regulatory assessment

            (1.8 )

Tax effect of other items

    (3.7 )   (12.4 )   (2.9 )

Adjusted earnings

  $ 103.6   $ 75.2   $ 55.1  
(8)
Adjusted earnings margin represents Adjusted earnings divided by revenues less cost of revenues.

(9)
Diluted Adjusted earnings per share represents Adjusted earnings divided by diluted weighted average shares outstanding.

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RISK FACTORS

        You should carefully consider the following risks and all of the information set forth in this prospectus before investing in our common stock.

Risks Relating to Our Business

We face intense competition and compete with a broad range of market participants globally, including our principal investors. Further consolidation and alliances among our securities trading competitors could impair our competitive position.

        The market for trade execution services is intensely competitive in the asset classes and geographies in which we operate. Increased competition may result in a decline in our share of trading activity and a decline in our revenues from transaction fees and market data fees, thereby adversely affecting our operating results.

        In the United States, the competition among securities exchanges and other securities execution venues has become more intense with regulatory changes. The U.S. listed cash equity securities marketplace has evolved dramatically in the years following the SEC's adoption of Regulation NMS. We compete in the U.S. listed cash equity securities market against NYSE and NASDAQ, other regional exchanges and several ATSs. Market participants have multiple venues for the execution of orders, including national securities exchanges as well as numerous off-exchange venues, including ATSs operating "dark pools" that do not publicly display quotations, "lit" ATSs that publicly display quotations operating as ECNs and broker-dealers who internalize orders off-exchange. For example, dark pool venues compete with us by offering low cost executions and differ from "lit" ATSs in the degree of transparency with respect to quotes and trades they offer and in restrictions on who may access these systems. Unlike "lit" venues that publicly display orders, dark pools do not display orders publicly or privately. In addition, while dark pools are required to publicly report trade executions, unlike lit venues that are national securities exchanges, such as BZX, BYX, EDGX and EDGA, those public reports do not immediately identify the dark pool responsible for the trade execution. Hence, dark pools are less transparent than lit venues. Moreover, dark pools with trading volume below certain levels have discretion to offer access on discriminatory terms, effectively blocking access to certain types of market participants. These features of dark pools, which are not available to national securities exchanges, such as BZX, BYX, EDGX and EDGA, can appeal to trading participants who seek to minimize the public disclosure of their trading interest or limit the types of other trading participants that can access their orders. In addition, various broker-dealers internalize their order flow or route their orders to third-party ATSs. Based on publicly available data regarding reported trades, for the year ended December 31, 2015, off-exchange trading accounted for approximately 35.4% of consolidated U.S. listed equity volume, and for the year ended December 31, 2014, off-exchange trading accounted for approximately 36.2% of consolidated U.S. equity volume. If off-exchange trading expands further, it will adversely affect our market share in the United States. In addition, newer market entrants with different models may seek status as national securities exchanges, further competing with our exchange business. For example, on August 21, 2015, a subsidiary of an ATS operator, IEX Group, Inc. filed an application with the SEC to register as a national securities exchange.

        The market for execution services within listed cash equity securities in Europe has become significantly more competitive since MiFID came into effect in 2007. MiFID will be superseded and enhanced by MiFID II and MiFIR, which are expected to be implemented at the beginning of 2018. MiFID created a structure for pan-European competition versus other exchange monopolies throughout the E.U. countries. As a result, new MTFs emerged that have captured significant market share from existing national exchanges. Our major competitors in Europe include the London Stock

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Exchange Group, or LSE, which also includes an MTF, Turquoise, Euronext, Deutsche Börse, NASDAQ, SIX Swiss Exchange and Bolsas y Mercados Españoles, or BME.

        The market for the trading of U.S. listed equity options is also intensely competitive, with fourteen U.S. options exchanges as of the date of this prospectus (not including a second U.S. options exchange of Miami International Holdings, Inc., planned for launch in the third quarter of 2016, pending SEC approval) competing for market share. Our primary competitors in the U.S. options market are CBOE, NYSE, NASDAQ, ISE and Boston Options Exchange Group, LLC, or BOX. As a result of our size and limited product offerings, certain of our competitors have advantages in terms of greater market share and name recognition in the market for trading U.S. listed equity options. These advantages enable our competitors to provide products and services we do not offer, including proprietary products. For instance, some products offered uniquely by CBOE (for example, products based on the VIX volatility index) are not traded on our platform. On March 9, 2016, NASDAQ announced that it had agreed to acquire ISE, which operates three options exchanges. Additionally, a rule change recently adopted by the Options Clearing Corporation, or the OCC, and affirmed on review by the SEC in February 2016, concerns a capital plan that could effectively allow the OCC's shareholder exchanges, which include CBOE, ISE, NASDAQ and NYSE, to monetize for their benefit the OCC's monopoly over options clearing. We believe that the capital plan has the potential to result in a wealth transfer from options investors to the OCC's shareholder exchanges, stifling future competition in the options market and increasing the costs of trading listed options.

        The spot FX market remains severely fragmented, with transparent automated marketplaces such as Bats Hotspot challenging ICAP plc (EBS BrokerTec), or ICAP, and Thomson Reuters (Reuters Matching, FXall). While the spot FX market recently has been experiencing a shift from competing interbank platforms to ECNs, the electronification of spot FX may encounter resistance from clients that still prefer to utilize the phone, Reuters Conversational Dealing, Instant Bloomberg Chat, Bloomberg terminals and key banking relationships for price discovery and trading. Furthermore, electronification of FX appears to be experiencing more resistance outside the United States. The electronic FX market is also intensely competitive, with multiple venues such as EBS, Reuters Matching, FXall, FX Connect, CME Group, Currenex, 360T, Bloomberg, FastMatch, Gain GTX and others competing for market share. Additionally, exchange operators are actively expanding into the global FX market. For example Deutsche Börse has recently completed its acquisition of 360T and NASDAQ has announced its plans to launch an FX trading market. Moreover, the current market may experience consolidation, such as the recent acquisition of Molten Markets by ICAP.

        We compete in the spot FX market based on our ability to execute our customers' trades at competitive prices, to retain our existing customers and to attract new customers. Certain of our competitors have larger customer bases, more established name recognition, and a greater market share in certain markets, such as Europe. These advantages may enable them, among other things, to:

    provide products and services we do not offer;

    offer products and services at prices below ours to gain market share and to promote other businesses, such as FX options listed securities, contracts for difference including contracts for precious metals, energy and stock indices, and OTC derivatives;

    more efficiently engage in and expand existing relationships with strategic alliances;

    market, promote and sell their products and services more efficiently; and

    develop stronger relationships with customers.

        In recent years, the securities trading industry has witnessed increased consolidation among market participants, such as the November 2013 acquisition of NYSE by Intercontinental Exchange and our own acquisition of Direct Edge in January 2014. More recently, in March 2016, the London Stock

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Exchange and Deutsche Börse executed a merger agreement aimed at creating the largest exchange operator in Europe. Additional consolidations and alliances among market participants may create larger internal liquidity pools that may attract trading volume and liquidity away from BZX, BYX, EDGX, EDGA and Bats Europe's exchanges and, therefore, lead to decreased revenues. In addition, consolidations or alliances among our current competitors may achieve cost reductions or other increases in efficiency, which may allow our competitors to offer lower prices or better customer service than we do. These post-merger competitors may be able to achieve efficiencies that allow them to offer lower transaction fees or other financial incentives, which may hinder our ability to stay competitive in the listed cash equity securities market and to further penetrate the options market. In addition, these mergers may result in stronger competitors for us than the premerger entities as stand-alone businesses in other markets that we may decide to enter, such as futures and other derivative products.

        In addition, Bats is dependent upon certain third parties for its ETP listings business, some of which are direct competitors of Bats. For example, Bats does not currently offer intraday net asset values, or INAVs, calculation services for ETP issuers, which the SEC requires ETP issuers to calculate and distribute for their funds. NYSE Arca, owned by Intercontinental Exchange, is the primary provider of INAVs for equity ETP issuers. In December 2015, Intercontinental Exchange completed its acquisition of financial market data provider Interactive Data Corp., or IDC. IDC provides data and calculation services for ETP issuers to generate INAVs for fixed-income funds. As a result of Intercontinental Exchange's acquisition of IDC, Intercontinental Exchange would increase its competitive advantage in the INAV calculation space, which could result in ETP issuers listing on BZX not to be able to obtain comparable commercial terms from IDC for IDC's provision of INAV calculation services for BZX-listed ETPs.

        Further, we may face competition from our principal investors. Our principal investors or their affiliates may already have or may acquire an ownership interest in competing businesses (including national securities exchanges, dark pools, MTFs, ATSs or ECNs). These businesses may compete with us, either in relation to existing product and service offerings or any diversification of our product and service offerings into new asset classes and/or new geographic locations. For example, certain of our principal investors have a material interest in another MTF, Turquoise, and are planning to launch a new trading venue, "Plato." Furthermore, many of our principal investors operate off-exchange market-making desks, internalization platforms, dark pools, "lit" ATSs and ECNs and smart order routers, each of which potentially competes with us.

        If we are unable to compete successfully in this environment, our business, financial condition and operating results may be adversely affected. Also, if our share of total trading volumes decreases relative to our competitors, we may be less attractive to market participants as a source of liquidity, and we may lose additional trading volume and associated transaction fees, market data fees and connectivity fees as a result.

Our market data fees and net transaction fees may be reduced due to declines in our market share, trading volumes or regulatory changes, and our lack of revenue diversification may adversely affect our operating results and place us at a competitive disadvantage.

        We derived 34.1% and 44.6% of our revenues less cost of revenues from market data fees and net transaction fees, respectively, for the year ended December 31, 2015. We derived 35.9% and 42.7% of our revenues less cost of revenues from market data fees and net transaction fees, respectively, for the year ended December 31, 2014. Approximately 84.0% and 83.8% of our market data fees for the years ended December 31, 2015 and 2014, respectively, represent our share of tape fees from the U.S. tape plans based on a formula, required by Regulation NMS, which takes into account both trading and quoting activity. For purposes of calculating this percentage, we have not attributed any incremental costs associated with providing trading and quoting information to the U.S. tape plans. Transaction fees represent fees that we earn for trade execution on BZX (including our U.S. listed equity options

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market), BYX, EDGX (including our U.S. listed equity options market), EDGA and Bats Europe, whether a trade is executed internally on BZX, BYX, EDGX, EDGA or Bats Europe or routed to another market center. Net transaction fees represent transaction fees less the liquidity payments and routing and clearing costs that we incurred to earn those transaction fees.

        The occurrence of any event that reduces the amount of market data fees or transaction fees that we receive, whether as a result of fee reductions, fewer members subscribing to the U.S. tape plans, declines in market share or trading volumes (or notional volume in the case of Bats Europe) or regulatory changes, will have a direct negative impact on our operating results and future profitability. For example, if our market share of U.S. listed cash equities and U.S. listed equity options trading, or our European cash equities trading, were to decline, our share of market data fees could also decline. In addition, if the amount of trading volume on BZX, BYX, EDGX or EDGA or notional value traded on Bats Europe decreases, we will lose transaction fees. Moreover, market data fees could decline as a result of a reduction in the numbers of market data users, for example because of consolidation among market data subscribers or due to a decline in professional subscriptions as a result of staff reductions in the financial services industry or otherwise. For a discussion of the factors that may impact trading volumes, see "—Current economic conditions could adversely affect our business and financial condition." Regulatory changes could also impact the manner in which we set our transaction fees, the fees we receive from market data, or our cost in providing such services. See "—We operate in a highly regulated industry. Regulatory changes and changes in market structure could have a material adverse effect on our business and those of many of our clients."

        In addition, our dependence upon revenues derived primarily from our transaction-based businesses may place us at a competitive disadvantage. Some of our competitors derive a more significant portion of their revenues from more than one source as a result of more diversified product and service offerings and in more numerous geographies. For example, NYSE, LSE, Euronext and NASDAQ may realize substantial revenue from listing fees and index licensing fees, and some of our FX competitors may realize substantial revenue from market data and port fees. In addition, many of our competitors also offer technology outsourcing. As a result, lower transaction fees or market data fees may impact our operating results and future profitability more significantly than our competitors', providing them with a competitive advantage in pricing their products and services or withstanding a reduction in trading volume.

Our industry is characterized by intense price competition.

        The securities trading industry and FX market are characterized by intense price competition. We may be required to adjust pricing to respond to actions by new or existing competitors, which could adversely impact operating results. We also compete with respect to the pricing of market data and with respect to value-added market data such as historical market data. If we are unable to compete successfully with respect to the pricing of our services and products, our business, financial condition and operating results may be adversely affected. Furthermore, to attract market share, we may offer "inverted" pricing specials or no-transaction fee trading from time to time. For example, our Bats Hotspot Platform has at times offered trading of spot gold and silver pairs without any transaction fee, or waived taker fees for certain currency pairs, and previously offered free trading for all transactions on Bats Hotspot's London-based matching engine through 2015. In addition, BZX recently began offering to pay an incentive fee to exchange-traded investment funds that list their shares on BZX. These forms of promotions may adversely affect our profitability.

Our revenues are positively correlated with overall market volume, which can be impacted by a number of factors, including market prolonged diminished volatility.

        A significant percentage of our revenue is tied directly to the volume of securities traded on our markets. Trading volume on our markets can be influenced by a number of factors, including market

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volatility. The U.S. listed cash equity market trading volume was flat from 2012 through 2014 and increased 7.8% in 2015 from 2014 trading volumes. In addition, other events may affect overall market volume on a sustained basis, including rule-making under Dodd-Frank. For example, the provision commonly known as the Volcker Rule restricts banking entities from engaging in certain kinds of proprietary trading, including with respect to listed equity securities and listed equity options. Still in its early stages of adoption, the Volcker Rule could have an adverse impact on U.S. equity market volumes and Bats' U.S. equity exchanges. For example, if banking entities reduce their trading activity and that activity is not replaced by other market participants, we may face a decline in our trading volumes, which could lower our revenues and may adversely affect our operating results.

        Revenue from our FX business is influenced by the general level of trading activity in the FX market. Our FX revenue and operating results may vary significantly from period to period due primarily to movements and trends in the world's currency markets and to fluctuations in trading levels. We have generally experienced greater trading volume and higher revenue in periods of volatile currency markets. Significant swings in the market volatility can also result in increased customer trading losses, higher turnover and reduced trading volume. In the event we experience lower levels of currency volatility, our revenue and profitability may be negatively affected.

        Like other financial services firms, our FX business and profitability are directly affected by factors that are beyond our control, such as economic and political conditions, government or central bank actions like the unexpected actions of the Swiss National Bank on January 15, 2015, broad trends in business and finance, changes in the volume of foreign currency transactions, changes in supply and demand for currencies, movements in currency exchange rates, changes in the financial strength of market participants, legislative and regulatory changes, changes in how such transactions are processed and disruptions due to terrorism, war or extreme weather events. Any one or more of these factors, or other factors, may adversely affect our FX business and results of operations and cash flows. A weakness in equity markets could result in reduced trading activity in the FX market and therefore could have a material adverse effect on our FX business, financial condition and results of operations and cash flows.

System limitations, failures or security breaches could harm our business.

        Our business depends on the integrity and performance of our computer and communications systems. If our systems cannot expand to cope with increased demand or otherwise fail to perform, we could experience unanticipated disruptions in service, slower response times and delays in the introduction of new products and services. These consequences could result in trading outages, lower trading volumes, financial losses, decreased customer service and satisfaction and regulatory sanctions. Our markets have experienced occasional systems failures and delays in the past and could experience future systems failures and delays.

        For example, on March 23, 2012, we experienced a serious technical failure on BZX, forcing us to cancel our planned IPO. The failure resulted from a software bug that appeared during the Bats IPO auction. In addition to forcing us to cancel our IPO, the technological failure played a role in the halting of another issuer's stock for five minutes. These technical failures damaged our reputation and resulted in increased regulatory scrutiny of the event by the SEC and other governmental authorities. We have since investigated that incident and adopted various policy and procedure enhancements, including implementation of an independent software quality assurance department, but there can be no guarantee that we will not suffer a similar technological failure in the future that damages our reputation and results in increased regulatory scrutiny by the SEC and other governmental authorities.

        Our systems and operations also are vulnerable to damage or interruption from human error, natural disasters, power loss, cyber attacks, sabotage or terrorism, computer viruses, unauthorized access, intentional acts of vandalism and similar events. Persons who circumvent security measures

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could wrongfully access and use our information or our customers' information or cause interruptions or malfunctions in our operations. Although we currently maintain and expect to maintain security measures designed to protect the integrity of our systems, multiple computer facilities designed to provide redundancy and back-up to reduce the risk of system disruptions and facilities expected to maintain service during a system disruption, such security measures, systems and facilities may prove inadequate. Any breach in security or system failure that allows unauthorized access, causes an interruption in service or decreases the responsiveness of our systems could impair our reputation, damage our brand name and negatively impact our business, financial condition and operating results.

We operate in a highly regulated industry. Regulatory changes and changes in market structure could have a material adverse effect on our business and those of many of our clients.

        Our securities markets and their participants are highly regulated and are subject to extensive regulation in the United States and Europe. In recent years, the securities trading industry and, in particular, the securities markets have also been subject to significant regulatory changes. Moreover, in the past several years, the securities markets have been the subject of increasing governmental and public scrutiny in response to the global economic crisis. For example, on July 21, 2010, Dodd-Frank was enacted, introducing significant changes to financial industry regulation. Dodd-Frank may also affect the structure, size, depth and liquidity of the financial markets generally and will require that certain standardized derivative products, likely including currency derivative products, be traded on a Swap Execution Facility, or SEF, or designated contract market, or DCM. Similarly, in Europe, the European Commission, or E.C., has proposed a draft delegated regulation in the context of the MiFID II reforms which would introduce a harmonized definition of currency derivative products across the European Union. If the proposed regulation is adopted in its current draft form, it would likely mean that a number of currency products which may have been treated as spot transactions (and outside the scope of the MiFID and certain other derivative rules) would thereafter be treated as derivative products (and consequently within the scope of the MiFID and certain other derivative rules). This may adversely impact the overall level of activity conducted in such products, although, to the extent that any such products are declared by the European Securities Markets Authority, or ESMA, to be subject to an obligation to trade on certain trading venues, this could lead to a greater proportion of the remaining activity taking place on trading venues.

        In addition, Congress, regulators and some media have been increasingly scrutinizing electronic trading and the structure of equity markets in recent years. The SEC continues to consider various potential market structure changes, which could result in reduced trading volumes, or which could negatively affect our business. For example, in June 2014, the Chair of the SEC announced that the SEC was conducting a comprehensive review of market structure. As part of that review, in January 2015, the SEC appointed a special market structure advisory committee of industry participants to review possible regulatory changes. In response to the SEC's efforts, many market participants, including Bats, have publicly announced recommendations for regulatory changes. Reforms recommended by various market participants have included: (i) the elimination of maker-taker pricing or a drastic reduction in access fees charged by exchanges, (ii) increased transparency around order handling practices, (iii) implementation of a so-called trade-at prohibition, which would restrict execution of a trade by a market center that was not displaying the best available quotation, such as off-exchange trading in listed equities, (iv) limitations on high frequency trading and restrictions on, and enhanced oversight of, broker-dealers' automated trading algorithms, (v) limitations on the distribution of direct, or proprietary, market data feeds by exchanges, (vi) changes to the governance models of the consolidated market data national market system plans, or SIPs, including potentially providing for increased representation by non-SROs, as well as increasing the SIPs' technological capacity, (vii) elimination of Self Regulatory Organization, or SRO, status for securities exchanges and (ix) limitations on or elimination of Rule 611 of Regulation NMS, which currently requires all market participants to execute trades at prices no worse than the best bid or offer displayed by an exchange or

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other automated trading center. To the extent the SEC decides to adopt some or all of these recommendations, our business could be negatively impacted. For example, elimination of maker-taker pricing or a reduction in access fees could make it more difficult to incentivize market makers to display orders on our exchanges, and could reduce our net transaction fees. Implementation of a trade-at prohibition could restrict our ability to execute non-displayed orders on our exchanges. New restrictions on high frequency trading or broker-dealers' use of automated trading algorithms could result in decreases in market volumes which could negatively affect our revenue. Additional restrictions on our ability to distribute proprietary market data could make it more difficult to derive revenue from the sale of such market data. Changes to the SIPs, including by providing for greater non-SRO participation or mandating further technological investments, could negatively impact the costs and revenues of the SIPs, which in turn could negatively impact the amount of revenue we receive from the SIPs. Elimination of SRO status for securities exchanges could have the effect of eliminating our ability to assert the legal defense of quasi-governmental immunity to shield us from civil liability for actions we take in furtherance of our SRO responsibilities, which in turn could subject us to liability for monetary damages in lawsuits. Elimination or limitation on Rule 611 could reduce market participants' need to execute trades on our exchanges when such exchange is displaying the best available price, reducing our trading volumes and revenues.

        Over the last several years the SEC and other regulators have proposed various specific market structure changes in addition to those described above. See "Regulation." Actions on any of the specific regulatory issues currently under review in the United States and Europe could have a material impact on our business. The SEC, FINRA and the national securities exchanges have proposed, adopted, or are in the process of implementing several initiatives aimed at addressing the oversight, integrity and resilience of the markets. These include large trader reporting, market access risk control rules, limit up/limit down trading price bands and market-wide circuit-breakers, among other initiatives. In addition, in July 2012, the SEC adopted a rule requiring FINRA and the securities exchanges, such as BZX, BYX, EDGX and EDGA, to develop a consolidated audit trail, or CAT, that will allow regulators to efficiently and accurately track all activity in listed securities throughout the U.S. markets. While we support these initiatives and believe they will strengthen the U.S. equity market structure, these and potential future market structure reforms could involve significant implementation and ongoing costs for our U.S. exchange subsidiaries and other market participants. We believe our customers would likely bear a portion of these expenses through increased trading costs, and could result in lower transaction volumes. For example, the costs of developing, building and operating the CAT are expected to be significant. Although the manner in which the costs of the CAT will be allocated among the exchanges, FINRA and market participants has not yet been finalized, to the extent that FINRA and the national securities exchanges impose new quoting or trading fees in order to fund the CAT, market participants may alter their trading activities, causing volumes to decline.

        Effective November 2015, the SEC's Regulation SCI requires providers of certain key market infrastructure, including BZX, BYX, EDGX and EDGA, to have comprehensive policies and procedures in place surrounding their technology. Regulation SCI, which stands for "Systems Compliance and Integrity," replaces the current voluntary compliance program with rules whose violation may be the subject of enforcement actions. Self-regulatory organizations, such as BZX, BYX, EDGX and EDGA, certain ATSs, the SIPs and certain clearing agencies are required to take specific measures to ensure that the core technology meets these new Regulation SCI standards, to conduct business continuity testing and to provide certain notifications in the event of systems disruptions and other events. While we support this regulation and do not anticipate material changes will be necessary for continued compliance, the burdens associated with compliance with such rule could negatively impact our business by increasing our operational expenses.

        In addition, the SEC recently approved a two-year "tick pilot" program to impose wider minimum quoting and/or trading increments, or tick sizes, in certain illiquid securities in an effort to incent

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liquidity provision in those securities. The tick pilot is scheduled to begin by October 3, 2016, and among other criteria, will generally include stocks of companies with $3 billion or less in market capitalization, an average trading volume of one million shares or less, and a volume weighted average price of at least $2.00 for each trading day during the measurement period prior to the effective date of the pilot. The tick pilot will consist of a control group of approximately 1,400 securities and three test groups with 400 securities in each selected by a stratified sampling. During the pilot: (i) pilot securities in the control group will be quoted at the current tick size increment of $0.01 per share and will trade at the currently permitted increments; (ii) pilot securities in the first test group will be quoted in $0.05 minimum increments, but will continue to trade at any price increment that is currently permitted; (iii) the second test group will be quoted in $0.05 minimum increments and will trade at $0.05 minimum increments, subject to a midpoint exception, a retail investor exception, and a negotiated trade exception; and (iv) pilot securities in the third test group will be subject to the same terms as the second test group and will also be subject to a "trade-at" requirement to prevent price matching by a venue not displaying at a price of a trading center's best "protected" bid or offer, unless an enumerated exception applies. The exchanges, including BZX, BYX, EDGX and EDGA, and FINRA are required to submit their initial assessments on the tick pilot's impact 18 months after the pilot begins based on data generated during the first 12 months of its operation. The tick pilot will require BZX, BYX, EDGX and EDGA to devote additional significant resources to implement and report on the program, increasing our costs. In addition, for tick pilot test group securities where execution at price increments narrower than the permitted quote is permitted, the implementation of the tick pilot could incentivize additional trading away from the exchanges, reducing the volume of orders executed on BZX, BYX, EDGX and EDGA.

        The continued growth of high frequency trading, and what, if any, response is appropriate, has also been the subject of extensive Congressional and regulatory consideration. High frequency trading generally refers to certain types of computer-executed automated trading strategies. A number of exchanges and other market participants have also been the subject of private litigation and regulatory enforcement actions alleging that high frequency trading firms have received unfair advantages at the expense of other traders. High frequency trading accounts for a significant percentage of the daily volume in the U.S. and European equity markets and these actions and other efforts to slow trading could lead to a reduction in trading volumes, negatively impacting all trading markets, including our business.

        Our customers are also highly regulated. The SEC, FINRA, the Commodity Futures Trading Commission, or CFTC, the Board of Governors of the Federal Reserve System, or Federal Reserve, the Federal Deposit Insurance Corporation, or FDIC, the OCC, the U.K. Financial Conduct Authority, or FCA, and other regulatory authorities could impose regulatory changes that could adversely impact the attractiveness of, and the ability of our customers to use, our markets. Regulatory changes by the SEC, FINRA, CFTC, Federal Reserve, FDIC, OCC, FCA or other regulatory authorities could result in the loss of a significant number of customers or a reduction in trading activity on our markets.

        The implementation of MiFID II in Europe will result in an alteration of the existing MiFID structure that has encouraged competition among market centers in Europe. The impact of MiFID II and MiFIR, is likely to be significant, and could reduce trading volumes and trading fees, while increasing our costs of operating in Europe.

        For example, MiFID II and MiFIR introduce a number of new rules which apply directly to European trading venues such as our MTF and RM. These rules include provisions governing high frequency algorithmic trading and specific obligations on firms operating RMs to put in place systems, procedures and arrangements to ensure the trading venue is resilient, has sufficient capacity to cope with order flow, has effective business continuity arrangements, etc. In particular, there are new rules specifically governing tick sizes, synchronization of business clocks and the imposition of limits on the ratio of orders to transactions which RMs will need to implement.

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        MiFIR also introduces a much broader transparency regime for RMs and MTFs covering not only pre-and post-trade transparency for equities but also for equity-like instruments, derivatives and fixed income instruments. Waivers from transparency are subject to venue-specific and European-wide volume caps which may curtail participants' ability to conduct dark book trading.

        In addition to the new trading venue and transparency rules noted above, MiFID II introduces enhanced internal organizational and compliance monitoring requirements for RMs which will require the enhancement of internal compliance arrangements, processes and procedures.

        These additional requirements, individually and in aggregate, could have a material adverse effect on our business and cash flows, financial condition and results of our European operations. They imply additional implementation expenditure but potentially also additional ongoing compliance resources. They may also have an adverse impact on the volume of trading that takes place on our venues thereby potentially reducing revenue.

        MiFIR may also have an adverse impact on our U.S. listed cash equity operations as a result of the introduction of a mandatory equity trading rule which would require E.U. investment firms to trade equities which are either admitted to trading on an RM or traded on an E.U. trading venue only on RMs, MTFs with systematic internalisers or with third-country trading venues which have been specifically assessed to be equivalent. Since a significant number of U.S. listed cash equities can be traded on E.U. trading venues, E.U. investment firms may be required to undertake trades in such U.S. listed cash equities only on those European markets unless and until an equivalence assessment is made in respect of our U.S. exchanges.

        On February 14, 2013, the E.C. published a proposal for a directive for a common Financial Transaction Tax, or FTT, in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia or the participating Member States.

        The proposed FTT has a broad scope and could, if introduced in the form originally proposed, apply to certain transactions relating to financial instruments (including secondary market transactions) in certain circumstances.

        Under the February 14, 2013 proposal, the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain transactions relating to financial instruments where at least one party is a financial institution (as defined therein), and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, "established" in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is the subject of the transaction is issued in a participating Member State.

        The FTT proposal remains subject to negotiation between the participating Member States. Ten out of the eleven participating Member States agreed on certain core principles at their December 2015 meeting, Estonia having withdrawn from the group. The next key deadline for the resolution of remaining issues is in June 2016. The FTT proposal may be altered prior to any implementation, the timing of which remains unclear. Additional E.U. Member States may decide to participate and/or certain of the participating Member States may decide to withdraw.

        Legislators in the U.S. have also sponsored bills to impose an FTT on certain financial market transactions, including transactions in securities on an exchange.

        If implemented, an FTT may, among other matters, make listing the affected financial instruments on an exchange less attractive for issuers than would be the case absent implementation of the FTT. By raising the cost of trading for our customers, an FTT may reduce the volume of transactions and the liquidity and market efficiency of the capital markets, reducing revenues.

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        In addition, Dodd-Frank will likely result in exchange or execution platform trading and clearing of many swaps, which could give greater liquidity and accessibility to derivatives that compete with options traded on our U.S. listed equity options markets. The Camp Tax Reform proposals, introduced as legislation in 2014 as a means to unifying the taxation of derivatives could result in adverse tax consequences to market participants, which may lead to fewer investors using listed equity options to reduce the risks of owning stock or generating additional income from their stock holdings. The proposals, if adopted as proposed, may reduce the volume of transactions in the U.S. listed equity options market. Furthermore, the SEC continues to consider whether to impose a cap on transaction fees charged by options exchanges similar to the caps applied to equity exchanges. Transaction fee caps would limit the amount of fees that we can charge to access our liquidity and, accordingly, the payments we can pay to market participants to attract liquidity.

        In addition to its other SRO responsibilities, BZX, as an ETP listing market, also is responsible for overseeing each listed company's compliance with BZX's listing standards. Our listings department evaluates applications submitted by issuers interested in listing their securities on BZX to determine whether the quantitative and qualitative listing standards have been satisfied. Once securities are listed, our listings department monitors each issuer's ongoing compliance with BZX's continued listing standards. Failure to comply with these SRO responsibilities could result in potential sanctions or fines and a negative impact on our reputation or branding.

        The legislative and regulatory environment in which the FX market operates is evolving and has undergone significant changes in the recent past and there may be future regulatory changes in the FX industry. FX market participants have seen an increasing number of law enforcement actions and regulatory inquiries into their business practices. The governmental bodies and regulatory organizations that regulate parts of the FX market have enacted, proposed and may consider additional legislative and regulatory initiatives and may adopt new or revised laws and regulations. Changes in the interpretation or enforcement of existing laws and regulations by these entities, or the adoption of new legal or regulatory requirements, may also adversely affect our FX business. For example, the New York State Department of Financial Services recently issued a consent order with Barclays Bank PLC, or Barclays, pursuant to which Barclays agreed, among other things, to pay a $150 million fine over the "last look" function in its electronic FX trading business. The Hotspot Platform contains "last look" functionality that may be used by certain platform participants. Changes in how "last look" is viewed by governmental bodies or regulatory organizations may have an adverse impact on the acceptance of "last look" functionality in the FX market generally as well as on our FX business.

We plan on expanding our FX business, which will expose us to additional risks, including increased regulatory oversight.

        In September 2015, Bats Hotspot launched a London matching engine to target specific currency pairs that are more active in Europe and attract more participation from Europe and Asia, complementing Bats Hotspot's New York area matching engine and giving investors two distinct pools of liquidity to drive price formation globally. This business expansion brings increased risk and potentially increased regulatory scrutiny.

        Bats Hotspot may launch a SEF. Launching the SEF would require Bats Hotspot to comply with additional regulatory obligations, as the SEF will be registered with and regulated by the CFTC. For example, under Dodd-Frank and CFTC rules, SEFs must establish and enforce trading and market monitoring procedures and maintain comprehensive business records, among other requirements. Similarly, Bats Hotspot may also launch an MTF or other venue in the United Kingdom that would be registered with and regulated by the FCA, and subject to corresponding obligations.

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Changes to the regulators and agencies governing European financial markets could adversely affect our business.

        A number of changes in the regulators and agencies governing European financial markets have been enacted or proposed since the financial crisis. In 2010, the U.K. Government announced plans to reform the U.K. regulatory regime by abolishing the Financial Services Authority and replacing it with two regulators, one covering prudential risks and the other covering conduct of business matters. Accordingly, on April 1, 2013, the FCA became the primary regulator of Bats Europe. In addition, three independent European agencies now regulate the financial markets, banking and insurance industries, with the mandate of contributing to the stability of the European Union's financial system by ensuring the integrity, transparency, efficiency and orderly functioning of securities markets, as well as by enhancing investor protection. In particular, ESMA fosters supervisory convergence both among national securities regulators and across financial sectors by working closely with the other competent European Supervisory Authorities, or ESAs.

        Until such changes have been in effect for a longer period of time, we cannot fully estimate what long term effect they will have on the oversight and operation of our European market, clearing and other operations, but we do expect it to affect our business, potentially leading to increased regulation and oversight of our operations and the European capital markets generally.

Regulatory changes or future court rulings may have an adverse impact on our revenue from proprietary market data products.

        Regulatory and legal developments could reduce the amount of revenue that we earn from our proprietary market data products. In the United States, we generally are required to file with the SEC any changes to the fees that we charge for our securities market data products. In recent years, certain industry groups have objected to the ability of exchanges to charge for certain market data products. Specifically, Securities Industry and Financial Markets Association, or SIFMA, has filed a number of denial of access applications with the SEC to set aside proposed rule changes to establish or modify fees for Bats market data products and related services. Each application is being held in abeyance pending a decision on a separate SIFMA denial of access application currently before the SEC's Chief Administrative Law Judge, or ALJ, regarding fees proposed by NASDAQ and NYSE for their respective market data products. An adverse ruling in that matter could cause the SEC to more closely examine exchange market data fees, which in turn could result in our having to reduce the fees we charge for market data. The SEC also has authority to undertake such review at its own discretion. If such an examination is conducted, and the results are detrimental to our U.S. securities exchanges' ability to charge for market data, there could be a negative impact on our revenues. We cannot predict how the ALJ will rule on the matter or whether, or in what form, any regulatory changes will be implemented, or their potential impact on our business. A determination by the SEC, for example, to link securities market data fees to marginal costs, to take a more active role in the market data rate-setting process, or to reduce the current levels of securities market data fees could have an adverse effect on our securities market data revenues.

        We believe Bats Europe currently offers market data to customers on a non-discriminatory basis at a reasonable cost. As regulators determine how market data should be disaggregated and what is a reasonable commercial basis for providing market data, as set out in MiFID II and MiFIR, it could affect our ability to offer market data products in the same manner that we do today thereby causing an adverse effect on our European market data revenues. While MiFID II aims to encourage a commercial solution to a consolidated tape in Europe, should this fail to materialize, policy makers might be encouraged to implement a mandatory solution that could impact our ability to develop our own commercial offering.

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We have indirect exposure to the European sovereign debt crisis.

        Bats Europe may from time to time hold cash reserves in U.K. sovereign government debt, commonly known as Gilts. In addition, many of its customers are banks who may hold investments in Euro-denominated sovereign debt. To the extent those customers are negatively impacted by those investments, they may be less able to pay amounts owed to us or renew service agreements with us. Such developments could negatively affect our business. Further, to the extent that sovereign debt concerns depress economic activity, it may negatively impact the number of transactions processed on our trading venues, resulting in lower revenue.

        In addition, an exit from the Euro by an E.U. Member State or an ongoing recession in the Euro zone and the related Euro crisis could lead to foreign exchange volatility and a potential loss of revenues if trading volumes are negatively impacted across all of our trading platforms. In particular, a referendum to vote on the United Kingdom's continued membership in the European Union is scheduled to take place on June 23, 2016. Should the United Kingdom vote to withdraw from the European Union, there may be an unfavorable business environment for companies with operations in the United Kingdom that do business in the European Union. In such a case, Bats Europe may move some or all of its operations to the European Union and the related costs and expenses could have a material adverse effect on our business.

We are dependent on the members of our senior management team and other key personnel.

        We are highly dependent upon our Chief Executive Officer and President, Chris Concannon, and the CEO of Bats Europe, Mark Hemsley. Both of these individuals' talents and leadership have been, and continue to be, critical to our success. The diminution or loss of the services of any one of these individuals for any reason, and any negative market or industry perception arising from that diminution or loss, would have a material adverse effect on our business.

        Our success also depends largely on the efforts and abilities of the other key members of our senior management team. Many of these individuals have worked together closely since our inception in 2005.

        Members of our senior management team are subject to employment agreements, each with a term of three years, with automatic one-year annual extensions. Notwithstanding the foregoing, an employment agreement and the corresponding employment relationship between us and our senior management may be terminated at any time by either party with or without cause or advance notice. Accordingly, it is possible that one or more members of our senior management team could resign to work elsewhere. Because each member of our senior management team has a different area of specialization, the departure of any one of these individuals could create a deficiency in one of the core aspects of our business, particularly given our small number of employees relative to our competitors.

        We are also dependent on the efforts of our team of technology professionals, many of whom have been with us for several years, and on our ability to recruit and retain highly skilled and often specialized personnel, particularly in light of the rapid pace of technological advances. The level of competition in our industry for individuals with this level of experience or these skills is intense. Significant losses of key personnel, particularly to competitors, could make it difficult for us to compete successfully. In addition, we may be unable to attract and retain qualified management and personnel in the future, including in relation to any diversification of our product and service offerings into new asset classes and/or new geographic locations.

        We do not maintain "key person" life insurance policies on any of our executive officers, managers, key employees or technical personnel. The loss of the services of these persons for any reason, as well as any negative market or industry perception arising from those losses, could have a material adverse effect on our business, financial condition and operating results.

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We may not be able to keep up with rapid technological and other competitive changes affecting our industries, and we may be unable to further diversify our business.

        The markets in which we compete are characterized by rapidly changing technology, evolving industry standards and regulations, frequent enhancements to existing products and services, the adoption of new services and products and changing customer demands and regulatory requirements. If our platforms fail to function as expected, our business would be negatively affected. In addition, our business, financial condition and operating results may be adversely affected if we cannot successfully develop, introduce and/or market new services and products or if we need to adopt costly and customized technology for our services and products. Further, our failure to anticipate or respond adequately to changes in technology, customer preferences and regulatory requirements or any significant delays in product development efforts could have a material adverse effect on our business, financial condition and operating results.

        In addition, we will face significant challenges as we seek to diversify our product and service offerings. We may, for example, diversify our equities business by competing with NYSE, NASDAQ and other exchanges and non-exchange trading platforms for new asset classes and in new geographic locations and new or existing listings. We may also diversify our FX business by competing with ICAP plc (EBS BrokerTec), Thomson Reuters and others for new asset classes and in new geographic locations. We will face substantial competition from these market centers, some of which have greater brand recognition than we do and offer a broader range of services than we currently offer. Accordingly, we may not be able to increase our revenues, compete successfully by further diversifying our product and service offerings or meet ongoing and changing regulatory requirements.

We generate a significant percentage of our total revenues from, and are provided with significant liquidity in our markets by, customers who are affiliates of our principal investors, who are not contractually obligated to continue to use our services or purchase our products and who also use the services of our competitors.

        We earn a significant percentage of our revenue from customers who are affiliates of our principal investors. For the years ended December 31, 2015, 2014 and 2013, 45.1%, 43.2%, and 36.3% of our total transaction fees, respectively, were generated by affiliates of our principal investors. One of our principal investors accounted for 11%, 12% and 10% of our total transaction fees during the years ended December 31, 2015, 2014 and 2013, respectively. In addition, affiliates of our principal investors also provide us with liquidity for which we provide them with a rebate. For the years ended December 31, 2015, 2014 and 2013, 52.2%, 51.5%, and 50.8% of our total liquidity payments, respectively, were generated by affiliates of our principal investors. For the years ended December 31, 2015 and 2014, none of our principal investors accounted for more than 10% of total liquidity rebates paid. For the year ended December 31, 2013, one principal investor accounted for 11% of total liquidity rebates paid. None of our customers is contractually or otherwise obligated to continue to use our services or purchase our products. In addition, affiliates of our principal investors and our other customers have made, and may continue to make, investments in businesses that directly compete with us. Our customers also trade, and will continue to trade, on markets operated by our competitors. The loss of, or a significant reduction in, participation on our markets by these customers may have a material adverse effect on our business, financial condition and results of operations.

We may not be able to successfully integrate Bats Hotspot, which may result in an inability to realize the anticipated benefits of the Bats Hotspot Acquisition.

        Integrating Bats Hotspot's operations will involve complex technological, operational and personnel-related challenges. This process will be time-consuming and may disrupt the business of the combined company. Difficulties, costs and delays could be encountered with respect to:

    the possible redesign of Bats Hotspot technology;

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    resolving possible inconsistencies in standards, controls, procedures and policies, business cultures and compensation structures between us and Bats Hotspot;

    the diversion of management's attention from ongoing business concerns and other strategic opportunities;

    the retention of Bats Hotspot's key employees and management;

    possible tax costs or inefficiencies associated with integrating the operations of the combined company; and

    the retention of strategic partners and attraction of new strategic partners.

        For these reasons, we may not achieve the anticipated financial and strategic benefits, including cost savings from operational efficiencies and synergies, from the acquisition of Bats Hotspot's businesses, and any actual cost savings and synergies may be lower than we currently expect and may take a longer time to achieve than we currently anticipate.

We may have difficulty executing our growth strategy and managing our growth effectively.

        We have experienced significant growth in our business since our inception in 2005, with material expansions into diverse businesses including European listed cash equity securities, U.S. listed equity options and global institutional spot FX trading. While our securities market share has increased, there is no guarantee this will continue in the future. Continuing to grow our businesses will require increased investment in our facilities, personnel and financial and management systems and controls. Unless our growth results in an increase in our revenues that is proportionate to the increase in our costs associated with this growth, our future profitability will be adversely affected. Furthermore, failure to successfully expand into new asset classes or new geographies may adversely affect our growth strategy and our future profitability.

        As part of our growth strategy, we intend to continue evaluating potential acquisition opportunities and strategic alliances. Any such transaction may be effected quickly, may occur at any time and may be significant in size relative to our existing assets and operations. The market for acquisition targets and strategic alliances is highly competitive, particularly in light of increasing consolidation in the securities trading industry and FX industry, which may adversely affect our ability to find acquisition candidates or strategic partners that fit our growth strategy and our investment parameters. These transactions involve numerous risks, including, among others:

    failure to achieve financial or operating objectives;

    failure to successfully and timely integrate any operations, products, services or technology we may acquire or combine within a strategic alliance;

    diversion of management's and other key personnel's attention;

    failure to obtain necessary regulatory or other approvals;

    potential loss of customers or personnel;

    failure to obtain necessary financing on acceptable terms; or

    acquisition-related litigation.

        Failure to successfully manage any acquisition or strategic alliance we may make in the future could adversely affect our growth strategy and our future profitability. Furthermore, future acquisitions or strategic alliances may require significant resources and may result in significant unanticipated losses, costs or liabilities.

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        Future acquisitions may be effected through the issuance of our common stock, which could substantially dilute the ownership percentage of our current stockholders.

If our goodwill or intangible assets become impaired we may be required to record a significant charge to earnings.

        As a result of our acquisitions of Chi-X Europe on November 30, 2011, Direct Edge on January 31, 2014 and Bats Hotspot on March 13, 2015, we have recorded approximately $1,042.5 million of goodwill and other acquired intangible assets. We assess the potential impairment of goodwill at least annually, or more frequently when events or changes in circumstances signal indicators of impairment are present. Adverse changes in economic conditions or our operations could affect the assumptions we use to calculate the fair value, which in turn could result in an impairment charge in future periods that would impact our results of operations and financial position.

The regulatory framework under which we operate and new regulatory requirements or new interpretations of existing regulatory requirements could require substantial time and resources for compliance, which could make it difficult and costly for us to operate our business.

        Our securities markets operate in a highly regulated industry and may be subject to regulatory actions or other legal proceedings that could lead to censures, fines or other penalties if we fail to comply with our legal and regulatory obligations or our customers fail to comply with their obligations. The securities trading industry is subject to significant regulatory oversight and could be subject to increased governmental and public scrutiny in the future in response to global conditions and events. In the United States, our markets are regulated by the SEC and our broker-dealer subsidiary is regulated by the SEC, FINRA and other applicable SROs. In the United Kingdom, our markets are subject to local and/or E.U. regulation. As a result, our RMs may be subject to audits, investigations, administrative proceedings and enforcement actions relating to compliance with applicable rules and regulations.

        In January 2015, the SEC completed two separate investigations into the development of order types: one related to BZX and BYX and another related to EDGX and EDGA. While the SEC concluded its investigation with no action taken with regards to BZX and BYX, the SEC accepted our offer of settlement with respect to EDGX and EDGA, which included a monetary penalty and an agreement to implement certain measures aimed at preventing future violations of the Exchange Act and the rules and regulations promulgated thereunder. In the future, we could be subject to SEC or other regulatory investigations or enforcement proceedings that could result in substantial sanctions, including revocation of our operating licenses. Any such investigations or proceedings, whether successful or unsuccessful, could result in substantial costs, the diversion of resources, including management time, and potential harm to our reputation, which could have a material adverse effect on our business, results of operations or financial condition. In addition, our exchanges could be required to modify or restructure their regulatory functions in response to any changes in the regulatory environment, or they may be required to rely on third parties to perform regulatory and oversight functions, each of which may require us to incur substantial expenses and may harm our reputation if our regulatory services are deemed inadequate.

        In addition, our registered broker-dealer subsidiary, Bats Trading, is subject to regulation by the SEC, FINRA and other SROs. As a registered broker-dealer, Bats Trading is subject to regulations concerning all aspects of its business, including trading practices, order handling, best execution, anti-money laundering, handling of material non-public information, safeguarding data, reporting, record retention, market access and the conduct of its officers, employees and other associated persons. In addition, Bats Trading is subject to regulatory requirements intended to ensure its general financial soundness and liquidity, which require that it comply with certain minimum capital requirements. The SEC and FINRA impose rules that require notification when a broker-dealer's net capital falls below

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certain predefined criteria, dictate the ratio of debt to equity in the regulatory capital composition of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. Additionally, the SEC's uniform net capital rule and FINRA rules impose certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC and FINRA for certain withdrawals of capital. Any failure to comply with applicable broker-dealer regulations could have a material adverse effect on the operation of our business, financial condition and operating results.

        Our European securities business is subject to regulatory oversight in the United Kingdom by the FCA, which through the "passporting" process provides authorization to carry on business in other EEA member states. The authorities may revoke this authorization if we do not suitably carry out our regulated business activities. The authorities are also entitled to request that we adopt measures in order to ensure that we continue to fulfill the authorities' requirements. Any failure by us to meet these requirements or any revocation by the authorities of our authorization to carry on business in other EEA member states would materially affect our ability to operate a trading venue on a pan-European basis and could adversely affect our business, financial condition and results of operations. We currently operate both an RIE and a routing broker in the United Kingdom.

        In addition, the regulatory authorities in certain foreign jurisdictions may require securities exchanges to be named on certain designated exchange lists maintained by such authorities. The failure of any of our exchanges to be named on any such list may make it difficult for certain foreign investors to invest, or prevent certain foreign investors from investing, in our listed securities, which may put our listings business in such jurisdictions at a competitive disadvantage compared to other securities exchanges that have been named on such designated exchange's lists. Failure to comply with the applicable foreign regulations may also subject us or our customers in such jurisdictions to regulatory actions or other legal proceedings that could lead to fines or other penalties.

We have self-regulatory obligations that may create conflicts of interests.

        We have obligations to regulate and monitor activities in our markets and ensure compliance with applicable law and the rules of our markets by market participants. In the United States, the SEC and others have expressed concern about potential conflicts of interest of "for-profit" markets performing the regulatory functions of an SRO. For example, we are responsible for identifying possible violations of the securities laws by our members and taking regulatory action against those members if such violations are confirmed. Although our U.S. exchanges outsource certain of their regulatory functions to FINRA, we could be conflicted in pursuing such regulatory actions against our customers because to do so could result in a loss of trading volumes on our markets. Any failure by us to diligently and fairly regulate our markets or to otherwise fulfill our regulatory obligations could significantly harm our reputation, prompt SEC scrutiny and adversely affect our business and reputation.

Our ability to implement or amend rules could be limited or delayed because of regulatory oversight, review or approval, which could negatively affect our ability to implement needed changes or expand our products or services.

        Our exchanges registered with the SEC must submit proposed rule changes to the SEC for its review and, in many cases, its approval. Even where a proposed rule change may be effective upon filing with the SEC, the SEC retains the right to suspend and disapprove such rule changes. The rule review process can be lengthy and can significantly delay the implementation of proposed rule changes that we believe are necessary to the operation of our markets. If the SEC delays or does not allow one of our exchanges to implement a rule change, this could negatively affect our ability to make needed changes or implement business activities. In addition, we must compete with ATSs that are not subject to the same SEC approval process and therefore may have lower regulatory and surveillance costs than us. There is a risk that other trading venues will be able to charge lower fees than us because they

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spend significantly less on regulation, attracting trading to those venues. The SEC has also been actively enforcing exchanges' compliance with these requirements, including entering an order against EDGX and EDGA for alleged failures to properly maintain SEC-approved rules relating to all of its order types. See "—Failures in our compliance systems could subject us to significant legal and regulatory costs. Furthermore, if our risk management methods are not effective, our business, reputation and financial results may be adversely affected."

        Similarly, the SEC must approve amendments to our exchange subsidiaries' certificates of incorporation and bylaws, as well as certain amendments to our certificate of incorporation and bylaws. The SEC may decide not to approve a proposed amendment or may delay such approval in a manner that could negatively affect our ability to make a desired change, which could prevent or delay us from improving the operations of our markets or recognize income from new products.

We depend on third-party service providers for certain services that are important to our business. An interruption or cessation of such service by any third-party could have a material adverse effect on our business.

        We depend on a number of service providers, including but not limited to, banking and clearing organizations such as the National Securities Clearing Corporation, or NSCC, and the OCC, and its member clearing firms; LCH.Clearnet Group, EuroCCP, SIX x-clear AG; data center providers such as Equinix, which hosts our primary data centers in the United States and Europe, and CenturyLink, which hosts our backup data center in the United States; the Consolidated Tape Association, or CTA, and the Options Price Reporting Authority, LLC, or OPRA; and various vendors of communications and networking products and services.

        We also rely on third-party broker-dealers for routing and clearing services in certain circumstances. Specifically, we may route an order from a customer away from our markets to another trading venue if there is insufficient liquidity on our markets to match the order and/or if the customer is utilizing one of our smart-order routing strategies. We may use a third-party broker-dealer to establish back-up connectivity to another exchange in the event that our connection to such exchange fails, because we do not have a direct connection to such exchange or to take advantage of tiered pricing rates at such exchange. Once we (or such third-party) fill an order on another market, the executed trade is sent to a clearing broker to match the details of the trade with the clearing broker for the other party to the trade. We rely on affiliates of Bank of America Merrill Lynch, Citigroup, Morgan Stanley, Wedbush Securities, Credit Suisse and Lime Brokerage, each of which is an affiliate of one of our principal investors, to route orders that are not routed directly by us and to clear certain trades routed to other markets.

        In addition, we currently rely on FINRA to perform certain regulatory functions on our behalf pursuant to a regulatory services agreement, or RSA, which we entered into in 2014. Under the RSA, we maintain ultimate responsibility for the regulatory activities.

        We cannot assure you that any of these providers will be able to continue to provide these services in an efficient manner or that they will be able to adequately expand their services to meet our needs. An interruption or malfunction in or the cessation of an important service by any third-party and our inability to make alternative arrangements in a timely manner, or at all, could have a material adverse impact on our business, financial condition and operating results.

Financial or other problems experienced by third parties could have an adverse effect on our business.

        We are exposed to credit risk from third parties, including customers, clearing agents and counterparties. For example, we are exposed to credit risk for transaction fees we bill to customers on a monthly basis in arrears. Our customers and other third parties may default on their obligations to us due to lack of liquidity, operational failure, bankruptcy or other reasons.

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        In addition, with respect to orders Bats Trading routes to other markets for execution on behalf of our customers, Bats Trading is exposed to some counterparty credit risk in the case of failure to perform on the part of our clearing firms, Wedbush Securities, Bank of America Merrill Lynch or Morgan Stanley, as well as failure on the part of our routing brokers (e.g., Morgan Stanley, Credit Suisse, NASDAQ, Lime Brokerage and Bank of America Merrill Lynch) to pass back transactional rebates. Wedbush Securities, Bank of America Merrill Lynch and Morgan Stanley guarantee trades until one day after the trade date, after which time NSCC provides a guarantee. Thus, Bats Trading is potentially exposed to credit risk to the counterparty to a trade routed to another market center between the trade date and one day after the trade date in the event that Wedbush Securities, Bank of America Merrill Lynch or Morgan Stanley fails to perform.

        With respect to U.S. equities, Bats Trading has counterparty credit risk exposure to Wedbush Securities and Morgan Stanley related to clearing until the day following the trade date. Bats Trading uses Wedbush Securities to clear trades routed through Credit Suisse as well as for trades routed directly to other exchanges and optionally dark pools. Morgan Stanley clears trades routed through the Morgan Stanley routing brokers and also clears executions routed to most dark pools. Bats Trading maintains counterparty credit risk exposure from routing brokers (i.e., Morgan Stanley, Credit Suisse, NASDAQ) with respect to rebates earned until completion of the routing brokers next invoice cycle following the execution.

        Bats Trading is subject to counterparty credit risk exposure from Wedbush Securities and Bank of America Merrill Lynch related to U.S. listed equity options until the day following the trade date. For U.S. listed equity options, Bats Trading uses Wedbush Securities to clear trades routed through Lime Brokerage as well as trades sent directly to another exchange. Bank of America Merrill Lynch is used to clear trades routed through its own routing broker. Counterparty credit risk also exists with respect to rebates earned from routing brokers (Lime Brokerage and Bank of America Merrill Lynch) until completion of the routing brokers' next invoice cycle has completed for an execution.

        Our exposure to credit risk may be further impacted by volatile securities markets that may affect the ability of our customers and other third parties to satisfy their contractual obligations to us. Moreover, we may not be successful in managing our credit risk through reporting and control procedures or by maintaining credit standards. Any losses arising from such defaults or other credit losses could adversely affect our financial condition and operating results.

        Bats Hotspot is not a counterparty to any FX transactions occurring on the Bats Hotspot Platform and it does not have any direct counterparty risk associated with such transactions. All transactions occurring on the Bats Hotspot Platform occur bilaterally between two banks or prime brokers as counterparties to the trade. While Bats Hotspot does not have direct counterparty risk, Bats Hotspot may suffer a decrease in transaction volume if a bank or prime broker experiences an event that causes other prime brokers to decrease or revoke the credit available to the prime broker experiencing the event. Therefore, Bats Hotspot may have risk that is related to the credit of the banks and prime brokers that trade FX on the Bats Hotspot Platform.

We may be required to inject further capital into EuroCCP.

        Bats Trading Limited owns 25% of EuroCCP, a Dutch domiciled clearing house. EuroCCP is one of three interoperable central counterparties, or CCPs, used to clear trades conducted on Bats Europe. If EuroCCP were to experience financial difficulties, Bats Europe might be required to inject further capital into it in order to maintain its working or regulatory capital. In a worst case scenario, EuroCCP might have its regulatory license suspended or withdrawn, or it might have to wind down. This would result in a loss to Bats Europe of its investment in EuroCCP and a withdrawal of EuroCCP as a clearing house to the Bats Europe markets.

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We may be required to assume ownership of a position in securities in connection with our order routing service, which could subject us to trading losses when we dispose of that position.

        We offer a smart-order routing service through our broker-dealer subsidiary, Bats Trading, which provides our customers with access to other market centers when we route their orders to those market centers for execution. In connection with this service, however, we may assume ownership of a position in securities. This may occur, for example, when a market center to which we have routed a customer's order experiences systems problems and is unable to determine the status of that order. When this happens, we may make a business decision to provide a cancellation notice to our customer, relieving our customer of any liability with respect to the order. We may be informed later, however, that the order was executed at the market center to which we routed it, in which case Bats Trading would be required to take ownership of that securities position. Our clearing brokers, Wedbush Securities, Bank of America Merrill Lynch and Morgan Stanley, maintain error accounts on behalf of Bats Trading into which such positions settle, and we require the respective clearing broker to trade out of those positions as expeditiously as possible, which could result in our incurring trading losses.

Current economic conditions could adversely affect our business and financial condition.

        Our business performance is impacted by a number of factors, including general economic conditions and other factors that are generally beyond our control. A long-term continuation of challenging economic conditions is likely to negatively impact our business. Poor economic conditions may result in a decline in trading volume and a reduction in the demand for our products and could affect the ability of our customers to meet their obligations to us.

        Securities market data revenues may also be significantly affected by global market conditions. Adverse market conditions may cause reductions in the number of recipients of our market data.

        Securities and FX trading volume is directly affected by economic, political and market conditions, broad trends in business and finance, unforeseen market closures or other disruptions in trading, the level and volatility of interest rates, inflation, changes in price levels of securities and the overall level of investor confidence. In recent years, trading volumes across our markets have fluctuated significantly depending on market conditions and other factors beyond our control. In addition, trading volume in a particular stock could be negatively impacted by a significant reverse stock split which materially reduces the number of shares of such stock in the market. It is not possible to accurately forecast volatility or trading volumes. Because a significant percentage of our revenue is tied directly to the volume of securities traded on our markets, it is possible that a general decline in trading volumes could lower revenues and may adversely affect our operating results if we are unable to offset falling volumes through increased market share or other pricing actions.

        In Europe, countries such as Portugal, Ireland, Italy, Greece and Spain have been particularly affected by the recent financial and economic conditions. The European Union, the European Central Bank and the International Monetary Fund have prepared rescue packages for some of the affected countries. Other Euro-zone countries have been forced to take actions to mitigate similar developments in their economies. We cannot predict with any certainty whether these packages or other rescue plans will ultimately be successful or the effect that they may have on our business, results of operations, cash flows and financial condition.

Fluctuations in our quarterly operating results may negatively affect the valuation of our common stock.

        Our business experiences seasonal fluctuations, reflecting reduced trading activity generally during the third quarter of each year and during the last month of each year. In addition, the financial services

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industry is risky and unpredictable and is directly affected by many national and international factors beyond our control, including:

    economic, political and geopolitical market conditions;

    natural disasters, terrorism, war or other catastrophes;

    broad trends in industry and finance;

    changes in price levels and volatility in the stock markets;

    the level and volatility of interest rates;

    changes in government monetary or tax policy;

    other legislative and regulatory changes;

    the perceived attractiveness of the U.S. or European capital markets; and

    inflation.

        Any one of these factors could have a material adverse effect on our business, financial condition and operating results by causing a substantial decline in the financial services markets and reducing trading volumes. As a result, it is possible that our operating results or other operating metrics may fail to meet the expectations of stock market analysts and investors. If this happens, the market price of our common stock may be adversely affected.

The occurrence or perception of unauthorized disclosure of confidential information could harm our business.

        In the course of our business, we receive, process, transmit and store confidential information. Our treatment of such information is subject to contractual restrictions. While we take measures to protect against unauthorized access to such information, these measures may be inadequate, and any failure on our part to protect this information may subject us to contractual liability and damages, loss of business, penalties and unfavorable publicity. Even the mere perception of a security breach or inadvertent disclosure of confidential information could harm our reputation. The occurrence of any of these events could have an adverse effect on our business.

Our inability to protect our intellectual property rights and claims by others that we infringe their intellectual property rights could adversely affect our business.

        To protect our intellectual property rights, we rely on a combination of trademark and copyright laws in the United States and similar laws in other countries, trade secret protection, confidentiality agreements and other contractual arrangements with our employees, customers and others. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated, and any application for registration of such rights could be denied. We may be unable to detect the unauthorized use of our proprietary information or take appropriate steps to enforce our intellectual property rights. Failure to protect our intellectual property adequately could harm our brand and affect our ability to compete effectively. Defending our intellectual property rights could result in the expenditure of significant financial and managerial resources, which could adversely affect our business, financial condition and operating results. Further, the laws of certain countries do not protect intellectual property rights to the same extent as the laws of the United States. Therefore, in certain jurisdictions, we may be unable to protect our intellectual property and proprietary technology adequately against unauthorized third-party copying or use, which could adversely affect our competitive position.

        Although we own patents covering our proprietary business processes related to the Bats 1000 Index and our proprietary business processes related to our now defunct European market-on-close

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product, as well as having filed patent applications further covering the administration of the Bats 1000 Index, our national best bid or best offer, or NBBO, Setter and Joiner pricing, our primary market auction, the business process related to operating an exchange based on the net asset value of an ETP, our CLP Program and our retail price improvement, or RPI, Program, we do not anticipate relying upon patents as a primary means of protecting our rights in our intellectual property. In any event, there can be no assurance that our patent applications will be approved, that any issued patents will adequately protect our intellectual property or that such patents will not be challenged by third parties.

        Finally, third parties may claim that we or customers indemnified by us are infringing upon their intellectual property rights. Even if we believe that such claims are without merit, they can be time-consuming and costly to defend and divert management resources and attention. Successful claims of intellectual property infringement also might require us to redesign infringing technology, enter into costly settlement or license agreements, pay costly damage awards or face a temporary or permanent injunction prohibiting us from using infringing technology. If we are found to be infringing and cannot, or do not, license the infringed technology on reasonable pricing terms or at all, or substitute similar technology from another source, our business, financial condition and results of operations could be adversely impacted.

Our use of open source software code may subject our software to general release or require us to re-engineer our software, which could harm our business.

        We have used open source software code to create our proprietary software for use in our business. Companies that incorporate open source software into their products have, from time to time, faced claims challenging the ownership of open source software. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open source software. In addition, some open source software licenses require users who distribute open source software as part of their software to publicly disclose all or part of the source code in their software and make any derivative works of the open source code available on unfavorable terms or at no cost. Open source license terms may be ambiguous, and many of the risks associated with usage of open source software cannot be eliminated. We believe that our use of open source software is in compliance with the relevant open source software licenses and does not require disclosure of any of our source code. However, if we were found to have inappropriately used open source software, we may be required to release our proprietary source code, re-engineer or discontinue use of our software or take other remedial action.

We are subject to risks relating to litigation, potential securities law liability and other liability.

        Many aspects of our business, including trading, market data services and listings, and the business of our members, potentially involve substantial liability risks. These risks include, among others, potential liability from disputes over terms of a trade and the claim that a system failure or delay caused monetary loss to a member or that an unauthorized trade occurred. For example, dissatisfied members that have traded on our electronic platform or those on whose behalf such members have traded, may make claims regarding the quality of trade execution, or allege improperly confirmed or settled trades, abusive trading practices, security and confidentiality breaches, mismanagement or even fraud against us or our members. In addition, because of the ease and speed with which sizable trades can be executed on our electronic platform, members can lose substantial amounts by inadvertently entering trade orders or by entering them inaccurately. A large number of significant error trades could result in member dissatisfaction and a decline in member willingness to trade in our electronic markets.

        In addition, SROs such as BZX, BYX, EDGX and EDGA are required by federal law to perform a variety of functions that would otherwise be performed by a governmental agency. As such, and similar to sovereign immunity accorded to governments, U.S. federal courts have held that SROs are immune from civil damages for conduct undertaken as part of their statutorily delegated adjudicatory, regulatory and prosecutorial authority. This immunity, however, only covers certain of our activities in

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the United States, and we could be exposed to liability under national and local laws, court decisions and rules and regulations promulgated by regulatory agencies.

        Furthermore, in the United States, our securities markets are subject to oversight by the SEC. As a result, we could be subject to investigations and judicial or administrative proceedings that result in substantial penalties if we were found to be out of compliance with our obligations under the federal securities laws. Any such liability or penalties could have a material adverse effect on our business. We have from time to time received inquiries and investigative requests from the SEC's Office of Compliance Inspections and Examinations as well as the SEC's Division of Enforcement seeking information about our and our members' compliance with the federal securities laws. For example, in January 2015, the SEC completed two separate investigations into the development of order types, one related to BZX and BYX and another related to EDGX and EDGA. While the SEC concluded its investigation with no action taken with regards to BZX and BYX, the SEC accepted our offer of settlement with respect to EDGX and EDGA which included a monetary penalty and an agreement to implement certain measures aimed at preventing future violations of the Exchange Act and the rules and regulations promulgated thereunder.

        From time to time we are also involved in various legal proceedings arising in the ordinary course of our business. While we do not believe that the outcome of any of these legal proceedings will have a material impact on our consolidated financial position, results of operations or cash flows, litigation is subject to many uncertainties, and the outcome of individual litigated matters is not predictable with assurance.

        On April 18, 2014, the City of Providence, Rhode Island filed a securities class action lawsuit in the Southern District of New York against Bats and Direct Edge, as well as 14 other securities exchanges. The action purports to be brought on behalf of all public investors who purchased and/or sold shares of stock in the United States between April 18, 2009 and the present on a registered public stock exchange (Exchange Defendants) or a U.S.-based alternate trading venue and were injured as a result of the misconduct detailed in the complaint, which includes allegations that the defendants committed fraud through a variety of business practices associated with, among other things, what is commonly referred to as high frequency trading. On May 2, 2014 and May 20, 2014, American European Insurance Company and Harel Insurance Co., Ltd. each filed substantially similar class action lawsuits against the Exchange Defendants which were ultimately consolidated with the City of Providence, Rhode Island securities class action lawsuit. On June 18, 2015, Judge Jesse Furman of the Southern District of New York held oral argument on the pending Motion to Dismiss and thereafter, on August 26, 2015, the Court issued an Opinion and Order granting Defendant's Motion to Dismiss, dismissing the Complaint in full. Plaintiff filed a Notice of Appeal of the dismissal on September 24, 2015 and its appeal brief on January 7, 2016. Respondent's brief was filed on April 7, 2016.

        On May 23, 2014 and May 30, 2014, Harold R. Lanier filed three class action lawsuits in the Southern District of New York against Bats and other securities exchanges. The complaints were identical in all substantive respects, but each related to the dissemination of market data under a different market system: (i) the NASDAQ Unlisted Trading Privileges, or UTP, Plan Market System; (ii) the OPRA Market System; and (iii) the Consolidated Quotation System, or CQS, and the Consolidated Tape System, or CTS. Each of the actions purported to be brought on behalf of all subscribers who entered into contracts with the exchanges for the receipt of market data and were injured as a result of the misconduct detailed in the complaints, which includes allegations that the defendants did not provide market data services in a non-discriminatory manner or provide subscribers with "valid" data (i.e., data that is accurate and not stale). On January 16, 2015, Judge Katherine Forrest of the Southern District of New York held oral argument on the pending Motion to Dismiss and thereafter, on April 28, 2015, the Court filed an Opinion and Order granting the Exchange Defendants' Motion to Dismiss, terminating all three class action lawsuits with prejudice. On May 20, 2015, Plaintiff filed a Notice of Appeal of the dismissal and on September 1, 2015, Appellant filed its

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appeal brief. Respondent's brief was filed on November 24, 2015 and Appellant's reply brief was filed on December 8, 2015. Oral arguments were held on March 3, 2016.

        In addition to potential sanctions, censure, monetary penalties and disruption of our business, an investigation, inquiry, regulatory enforcement action and the related publicity could impair our reputation and damage our brand name, particularly with our members and other market participants. This could result in a decrease of our share of total trading volumes relative to our competitors, which may make us less attractive to market participants as a source of liquidity and cause us to lose additional trading volume and associated fees, which would adversely affect our business, reputation, financial condition and operating results.

        Our European business is subject to regulatory oversight in the United Kingdom by the FCA, which through the "passporting" process provides authorization to carry on business in other EEA member states. In addition, our operations are regulated at the European Union level. If a regulatory authority makes a finding of non-compliance, conditional fines could be imposed, and our licenses could be revoked. Any such fine or revocation of a license could have a material adverse effect on our business.

Failures in our compliance systems could subject us to significant legal and regulatory costs. Furthermore, if our risk management methods are not effective, our business, reputation and financial results may be adversely affected.

        Our ability to comply with all applicable laws and rules is largely dependent on our establishment and maintenance of compliance, audit, risk and reporting systems and procedures, as well as our ability to attract and retain qualified compliance, audit and risk management personnel. These systems and procedures may not be fully effective. We face the risk of intervention by regulatory authorities, including extensive examination and surveillance activity. In the case of actual or alleged non-compliance with applicable laws or regulations, we could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties, settlements or civil lawsuits, including by customers, for damages, which can be substantial. In the past, the SEC has brought actions against exchange operators for failing to fulfill their obligations to have an effective regulatory system. Any failure to comply with applicable laws and rules could adversely affect our business, reputation, financial condition and operating results and, in extreme cases, our ability to conduct our business or portions thereof.

        Additionally, we have adopted policies and procedures to identify, monitor and manage our risks. For example, our Global Policy for Enterprise Risk Management, or ERM, adopts a framework for identifying and managing risks in both our U.S. and European operations. In the U.S., the ERM framework is overseen by the U.S. exchanges' Audit Committee, as well as the company's Audit Committee, and ultimately the company's board of directors. The ERM framework is also periodically reviewed by the SEC's Office of Compliance Inspections and Examinations as part of routine inspections. The policy created a firm-wide risk committee that regularly reviews known and emerging risks, as well as the maintenance of the risk register. The European ERM framework is overseen by the Bats Trading Limited Audit, Risk and Compliance Committee as well as the company's Audit Committee, and ultimately the company's board of directors. The FCA has also reviewed and approved the framework and maintains continuous dialogue with European executive management on risk-related matters. The framework has been in place formally since January 2013 and, in addition to the policy and strategy, comprises a risk appetite statement and risk register. We also maintain a vendor management policy that is intended to both manage the business relationships and mitigate the risks associated with utilizing outside vendors and other third-party service providers. We employ a vendor risk tool to facilitate this process.

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        These policies and procedures, however, may not be fully effective. If our policies and procedures are not fully effective or we are not always successful in monitoring or evaluating the risks to which we are or may be exposed, our business, reputation, financial condition and operating results could be materially adversely affected.

Damage to our reputation could have a material adverse effect on our business.

        We believe one of our competitive strengths is our strong industry reputation. Various issues may give rise to reputational risk, including issues relating to:

    the representation of our business in the media;

    the quality of our products, including the reliability of our transaction-based business, and the accuracy of our market data;

    the ability to execute our business plan, key initiatives or new business ventures and the ability to keep up with changing customer demands and regulatory initiatives;

    our regulatory compliance and our enforcement of compliance on our customers;

    the accuracy of our financial statements and other financial and statistical information;

    the quality of our corporate governance structure;

    the quality of our disclosure controls or internal controls over financial reporting, including any failures in supervision;

    the integrity and performance of our computer and communications systems;

    security breaches, including any unauthorized delivery of proprietary data to third parties;

    management of our outsourcing relationships, including our relationship with FINRA;

    any misconduct or fraudulent activity by our employees, especially senior management, or other persons formerly or currently associated with us;

    our listings business and our enforcement of our listing rules; and

    any negative publicity surrounding our listed companies.

        Damage to our reputation could cause a reduction in the trading volume on our exchanges or cause us to lose customers. This, in turn, may have a material adverse effect on our business, financial condition and operating results.

Because we have operations outside of the United States, we are exposed to currency risk.

        We have operations in the United States, the United Kingdom, continental Europe and Singapore. We therefore have significant exposure to exchange rate movements between the British pound, the Euro, the Singapore dollar and the U.S. dollar. Significant inflation or changes in foreign exchange rates with respect to one or more of these currencies could occur as a result of general economic conditions, acts of war or terrorism, changes in governmental monetary or tax policy or changes in local interest rates. These exchange rate differences will affect the translation of our non-U.S. results of operations and financial condition into U.S. dollars as part of our consolidated financial statements.

Changes in tax laws, regulations or policies could have a material adverse effect on our financial results.

        Like other corporations, we are subject to taxes at the federal, state and local levels, as well as in non-U.S. jurisdictions. Changes in tax laws, regulations or policies could result in us having to pay higher taxes, which would in turn reduce our net income. For example, in 2015, our tax liability

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increased as a result of legislative changes in New York and New York City. In computing our tax obligation in federal, state and local and non-U.S. jurisdictions, we take various tax positions on matters that are not entirely free from doubt. We cannot assure you that upon review of these positions the applicable tax authorities will agree with our positions. A successful challenge by a tax authority could result in additional taxes being imposed on us.

The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain qualified board members.

        As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and BZX listing requirements. The requirements of these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and may also place undue strain on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls for financial reporting. Our management will be required to report on the effectiveness of our internal control over financial reporting and our independent registered public accounting firm will be required to attest to such internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, significant resources and management oversight will be required. As a result, management's attention may be diverted from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations. Failure to maintain an effective internal control environment could result in our not being able to accurately report our financial results, prevent or detect fraud or provide timely and reliable financial information pursuant to the reporting obligations we will have as a public company, which could have a material adverse effect on our business, financial condition and results of operations. Further, it could cause our investors to lose confidence in the financial information we report, which could adversely affect the price of our common stock.

        These rules and regulations could also make it more difficult for us to attract and retain qualified independent members of our board of directors. Additionally, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance. We may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.

Risks Relating to Our Indebtedness

We have a substantial amount of debt and the cost of servicing those obligations could adversely affect our business, financial condition or operating results and such risk could increase if we incur more debt. We may be required to prepay our obligations.

        We have a substantial amount of indebtedness and other liabilities. As of December 31, 2015, total liabilities were $937.0 million, of which $687.5 million represents long-term debt obligations, total assets were $1,316.9 million and total equity was $379.9 million. As of December 31, 2014, total liabilities were $702.4 million, of which $474.4 million represents long-term debt obligations, total assets were $1,006.6 million and total equity was $304.2 million. We may not have sufficient funds to satisfy all such obligations as a result of a variety of factors, some of which may be beyond our control. If the opportunity for a strategic acquisition arises, we may be required to incur additional debt for these purposes or to fund working capital needs, which we may not be able to obtain. The amount of debt we carry and the terms of our indebtedness could adversely affect us in several ways, including:

    our ability to obtain additional financing in the future for working capital, capital expenditures and general corporate purposes, including strategic acquisitions, may be impaired;

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    our ability to use operating cash flow in other areas of our business may be limited because a substantial portion of our cash flow from operations may have to be dedicated to the payment of the principal and interest on our indebtedness;

    reporting lower earnings as result of rising interest expense from our indebtedness;

    the level of debt we carry could increase our exposure to a continued downturn in general economic conditions;

    the terms of such indebtedness could restrict our ability to pay future dividends; and

    the level of debt we carry could restrict our corporate activities, including our ability to respond to competitive market conditions, to provide for capital expenditures beyond those permitted by the loan agreements or to take advantage of acquisition opportunities and grow our business.

        In the event that we fail to comply with the covenants in any current or future loan agreements, there could be an event of default under the applicable instrument. As a result, all amounts outstanding under our current or any future debt instruments may become immediately due and payable. If interest rates were to increase significantly or if we are unable to generate sufficient cash flow from operations in the future, we may not be able to service debt under any current or future loan agreements and may have to refinance all or a portion of our debt, structure our debt differently, obtain additional financing or sell assets to repay such debt.

        Restrictive covenants in our credit facility may adversely affect us. Our credit facility requires us not to have a debt to earnings ratio above certain amounts as set forth in the credit facility.

        Our ability to secure additional financing for growth or to refinance any of our existing debt is also dependent upon the availability of credit in the marketplace, which has experienced severe disruptions due to the recent economic crisis. If we are unable to secure additional financing or such financing is not available at acceptable terms, we may be unable to secure financing for growth or refinance our debt obligations, if necessary.

In the event that we need debt financing in the future, recent uncertainty in the credit markets could affect our ability to obtain debt financing on reasonable terms.

        In the event we were to require additional debt financing in the future, the ongoing uncertainty in the credit markets, including the European sovereign debt crisis, could materially impact our ability to obtain debt financing on reasonable terms. The inability to access debt financing on reasonable terms could materially impact our ability to make acquisitions, refinance existing debt or materially expand our business in the future.

Increases in interest rates will adversely impact our results of operations.

        For the approximately $700 million amount outstanding under our current credit facility, as well as borrowings incurred under our revolving credit facility, increases in variable interest rates will increase the amount of interest expense that we pay for our borrowings and have a negative impact on our results of operations. As of December 31, 2015, the one-month London Interbank Offered Rate, or LIBOR, was 0.430%. Any increase in the LIBOR will increase our interest expense on approximately $121.9 million of debt. If the LIBOR were to exceed the floor interest rate of 1.00%, we would incur a negative impact of higher interest expense on the remaining balance of our debt.

Any reduction in our credit rating could increase the cost of our funding from the capital markets.

        Our long-term debt is currently rated speculative grade by two of the major rating agencies. These rating agencies regularly evaluate us and their ratings of our long-term debt are based on a number of factors, including our financial strength as well as factors not entirely within our control, including

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conditions affecting the financial services industry generally. There can be no assurance that we will maintain our current ratings. Our failure to maintain those ratings could adversely affect the cost and other terms upon which we are able to obtain future funding and increase our cost of capital.

Risks Relating to an Investment in Our Common Stock

Volatility in our stock price could adversely affect your investment in our common stock.

        There has not been a public market for our stock prior to this offering. We cannot predict the extent to which a trading market for our common stock will develop or how liquid that market might become. If you purchase shares of common stock in this offering, you will pay a price that was not established in the public trading markets. The initial public offering price will be determined by negotiations between us, the underwriters and the selling stockholders. You may not be able to resell your shares above the initial public offering price and may suffer a loss on your investment.

        Broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance. Factors that could cause fluctuations in our stock price may include, among other things:

    the representation of our business in the media;

    actual or anticipated variations in quarterly operating results;

    changes in financial estimates by us or by any securities analysts who might cover our stock;

    economic, political and geopolitical market conditions;

    conditions or trends in our industry, including trading volumes, regulatory changes or changes in the securities marketplace;

    changes in the market valuations of other companies operating in our industry;

    announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;

    announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us or others operating in our industry, including our principal investors;

    additions or departures of key personnel; and

    sales of our common stock by our directors and officers or our principal investors following the expiration of the applicable transfer restrictions or the occurrence of other limited circumstances.

We plan to list our security on our own market, BZX. Any technical failures or outages associated with that listing could negatively impact our stock and subject us to reputational harm and regulatory scrutiny, and a loss of business.

        Upon completion of the offering, we plan to list our security on our own exchange, BZX. Our security will be the first corporate listing on BZX and to the extent we suffer a technological failure or outage associated with that listing, we could suffer a loss of business, and incur reputational harm and regulatory scrutiny and potentially regulatory sanctions. In addition, such a failure or outage could result in the cancellation of the offering. For example, on March 23, 2012, we experienced a serious technical failure on BZX, forcing us to cancel our planned IPO. The failure resulted from a software bug that appeared during the Bats IPO auction. In addition to forcing us to cancel our IPO, the technological failure played a role in the halting of another issuer's stock for five minutes. Ultimately, the technological failure caused us to withdraw our IPO, which was a widely reported, high-profile event that damaged our reputation and resulted in increased regulatory scrutiny of the event by the

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SEC and other governmental authorities. We have since investigated that incident and adopted various policy and procedure enhancements, including implementation of an independent software quality assurance department, but there can be no guarantee that we will not suffer a similar failure in conjunction with this planned offering of securities. Moreover, we are inexperienced with overseeing the additional operational and regulatory issues associated with corporate listings. To the extent we suffer an operational or regulatory failure associated with our listing of Bats or another corporate listing, we could damage our reputation and subject ourselves to increased regulatory scrutiny by the SEC and other governmental authorities.

We will be controlled by our principal investors, whose interests may differ from those of other stockholders.

        Upon completion of this offering, our principal investors will collectively own approximately 70,003,838 shares of our common stock and 7,877,756 shares of our non-voting common stock, representing approximately 79.7% of the total voting power of our capital stock. We are not a party to any voting agreement with any of our stockholders, other than the Investor Rights Agreement dated as of January 31, 2014, among us and our stockholders (which, pursuant to its terms, will terminate upon consummation of this offering, except for the registration rights contained therein), which we refer to as the Investor Rights Agreement, and we are not aware of any other voting agreements among our principal investors; however, they may enter into voting agreements in the future or otherwise vote in a similar manner. To the extent that all of these principal investors vote similarly, they will be able, by virtue of their ability to elect our board of directors, to control our policies and operations, including, without limitation, the determination of our strategic plans, appointment of management, future issuances of our common stock or other securities, the payments of dividends on our capital stock, entering into extraordinary transactions and the approval of major financing decisions, and their interests may not in all cases be aligned with your interests. This concentrated control will limit your ability to influence corporate matters. As a result, the market price of our common stock could be adversely affected.

        Affiliates of our principal investors are also significant customers. See "Certain Relationships and Related Transactions." As a result, the interests of these investors could conflict with your interests as holders of our common stock in a number of ways. For example:

    you may disagree with the structure and timing of future transfers by these stockholders of all or any portion of their ownership interests in us. The actual or potential sale by these stockholders of their holdings of our common stock either directly or upon conversion of non-voting common stock held by them could cause the valuation of our stock to decline significantly;

    these stockholders may have or acquire an ownership interest in competing businesses (including national securities exchanges, MTFs or ECNs) and they may make decisions that favor the competing enterprise over our company; and

    many of these stockholders, as affiliates of our customers, have an incentive to favor commercial terms that may not be advantageous to us, such as lower "taker fees" and higher "maker" rebates on BZX and EDGX.

        Accordingly, our principal investors may have different business objectives, any of which could adversely impact the market price of your shares of common stock.

Certain affiliates of the underwriters of this offering are our principal investors, some of which are also selling stockholders, and therefore, they have interests in this offering beyond customary underwriting discounts and commissions.

        Each of Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated,

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Goldman, Sachs & Co. and Nomura Securities International, Inc., who are underwriters of this offering, is an affiliate of one of our principal investors. Certain affiliates of the underwriters of this offering are participating as selling stockholders in this offering. There may be a conflict of interest between their interests as selling stockholders (e.g., to maximize the value of their investment) and their respective interests as underwriters (e.g., in negotiating the initial public offering price) as well as your interest as a purchaser. As affiliates of participants in this offering that may seek to realize the value of their investment in us, these underwriters could have interests beyond customary underwriting discounts and commissions. See "Certain Relationships and Related Transactions—Underwriters (Conflicts of Interest)." Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup, Goldman, Sachs & Co., Jefferies LLC and Nomura Securities International, Inc., underwriters of this offering, or their affiliates (as defined in FINRA Rule 5121), will each receive more than 5% of net offering proceeds and will have a "conflict of interest" pursuant to FINRA Rule 5121(f)(5)(C)(ii). Accordingly, this offering will be made in compliance with the applicable provisions of FINRA Rule 5121. Pursuant to FINRA Rule 5121, a "qualified independent underwriter" (as defined in FINRA Rule 5121) must participate in the preparation of the prospectus and perform its usual standard of due diligence with respect to the prospectus. Sandler O'Neill & Partners, L.P. has agreed to act as qualified independent underwriter for the offering and to perform a due diligence investigation and review and participate in the preparation of the prospectus. Although the qualified independent underwriter has participated in the preparation of the prospectus and conducted due diligence, we cannot assure you that this will adequately address any potential conflicts of interest. See "Underwriters (Conflicts of Interest)."

If securities or industry analysts do not publish research or reports about us, or if they adversely change their recommendations regarding our common stock, then our stock price and trading volume could decline.

        The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us, our industry and our markets. If no analyst elects to cover us and publish research or reports about us, the market for our common stock could be severely limited, and our stock price could be adversely affected. In addition, if one or more analysts ceases coverage of us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. If one or more analysts who elect to cover us adversely changes their recommendations regarding our common stock, our stock price could decline. In addition, SEC rules may make it impractical for analysts associated with some of our principal investors to cover us.

Our share price may decline due to the large number of shares eligible for future sale.

        Sales of substantial amounts of our common stock, or the possibility of such sales, may adversely affect the market price of our common stock. These sales may also make it more difficult for us to raise capital through the issuance of equity securities at a time and at a price we deem appropriate. See "Shares Eligible for Future Sale" for a discussion of possible future sales of common stock.

        Upon completion of this offering, we will have 87,699,410 shares of common stock and 7,980,017 shares of non-voting common stock outstanding. Shares of non-voting common stock are convertible into common stock at the option of the holder in connection with any "qualified transfer." See "Description of Capital Stock." Of these shares, the 13,300,000 shares of common stock sold in this offering will be freely transferable without restriction or registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares purchased by one of our existing "affiliates," as that term is defined in Rule 144 under the Securities Act. In addition, all of our executive officers and directors and the holders of substantially all of our capital stock are subject to lock-up agreements with the underwriters of this offering that restrict such persons' ability to transfer shares of our common stock for periods of at least 180 days, and for a portion of the shares, 360 and 540 days, from the date of this prospectus. The lock-up agreements limit the number of shares of common stock that

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may be sold immediately following this offering. Approximately 35,409,552 shares will become eligible for sale upon expiration of the 180-day lock-up period, approximately 24,457,696 additional shares will become eligible for sale upon expiration of the 360-day lock-up period and approximately 24,457,944 additional shares will become eligible for sale upon expiration of the 540-day lock-up period. See "Shares Eligible for Future Sale."

        In addition to outstanding shares eligible for sale, upon completion of this offering, we intend to file a registration statement under the Securities Act covering all 6,984,754 shares of common stock subject to outstanding options or issuable pursuant to our equity incentive plans as of December 31, 2015. Shares registered under such registration statement will be available for sale in the open market, subject to vesting restrictions and/or exercise and other restrictions. See "Shares Eligible for Future Sale—Stock Options."

        Additionally, the Investor Rights Agreement provides for certain registration rights, including demand registration rights. For a more detailed description of these registration rights, see "Description of Capital Stock—Registration Rights."

        Upon completion of this offering, our principal investors will collectively own approximately 70,003,838 shares of our common stock and 7,877,756 shares of our non-voting common stock, representing approximately 79.7% of the total voting power of our capital stock. See "Principal and Selling Stockholders."

Your ownership of our company may be diluted if additional capital stock is issued to raise capital, to finance acquisitions, in connection with strategic transactions or pursuant to stock options or other equity compensation awards.

        We may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing equity or convertible debt securities, which would reduce the percentage ownership of existing stockholders. As of December 31, 2015, after giving effect to the reclassification and stock split, 1,946,038 shares of common stock were issuable upon the exercise of outstanding stock options, and an aggregate of 6,984,754 of common stock were reserved for future issuance under our equity incentive plans. In addition, as of December 31, 2015, after giving effect to the reclassification and stock split, 95,679,427 shares of common stock and non-voting common stock were outstanding, which included 887,778 shares of unvested restricted stock. Shares of non-voting common stock are convertible into common stock at the option of the holder in connection with any "qualified transfer." See "Description of Capital Stock." Our board of directors has the authority, without action or vote of the stockholders, to issue all or any part of our authorized but unissued shares of common stock, non-voting common stock or preferred stock, including pursuant to stock options or other equity compensation awards. Following our reclassification and 1-for-2.91 stock split, 278,509,852 shares of common stock, 16,847,842 shares of non-voting common stock and 43,500,000 shares of preferred stock will be authorized and unissued under our amended and restated certificate of incorporation. Future issuances of common stock or non-voting common stock would reduce your influence over matters on which stockholders vote and would be dilutive to earnings per share, as applicable. In addition, any newly issued preferred stock could have rights, preferences and privileges senior to those of our common stock and non-voting common stock. Those rights, preferences and privileges could include, among other things, the establishment of dividends that must be paid prior to declaring or paying dividends or other distributions to holders of our common stock and non-voting common stock or greater or preferential liquidation rights, which could negatively affect the rights of holders of our common stock.

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Provisions in our amended and restated certificate of incorporation and bylaws, Delaware law and FINRA rules might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

        Our organizational documents will contain provisions that may have the effect of discouraging or delaying a change in control of us or unsolicited acquisition proposals that a stockholder might consider favorable. These provisions generally include:

    voting and ownership limitations. Our certificate of incorporation prohibits any person from owning greater than 40% of any class of our capital stock, prohibits exchange members from owning greater than 20% of any class of our capital stock and prohibits all persons from exercising a greater than 20% voting power of our issued and outstanding capital stock, in each case subject to certain conditions and exceptions;

    advance notice requirements for stockholder proposals and director nominations;

    establishing a classified board of directors with staggered three-year terms;

    limits on stockholders to act by written consent;

    authorizing the issuance of "blank check" preferred stock that our board of directors could use to implement a stockholder rights plan;

    requiring super-majority voting to amend some provisions in our amended and restated certificate of incorporation and bylaws;

    providing that our board of directors is expressly authorized to amend or repeal any provision of our amended and restated bylaws; and

    restricting the forum for certain litigation against us to Delaware.

        In addition, Section 203 of the Delaware General Corporation Law may delay or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations and other transactions between us and holders of 15% or more of our common stock. Anti-takeover provisions could depress the price of our common stock by acting to delay or prevent a change in control of our company.

        Further, Bats Trading is a member of FINRA and subject to FINRA rules, which could impede or delay a change of control. FINRA's NASD Rule 1017 generally provides that FINRA approval must be obtained in connection with any transaction resulting in a single person or entity acquiring, directly or indirectly, 25% or more of a FINRA member firm's or its parent company's equity. Our European subsidiaries, Bats Trading Limited and Chi-X Europe Limited, are also regulated by the FCA in the United Kingdom, as an RIE and an Authorised Firm, respectively, and are also subject to change in control rules. FCA approval must be obtained for any transaction that would result in a single person or entity acquiring, directly or indirectly, 20% of Bats Europe or 10% of Chi-X Europe Limited, including through ownership of its parent company's equity.

        The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition. See "Description of Capital Stock—Certain Provisions of Our Amended and Restated Certificate of Incorporation and Bylaws" for a discussion of these provisions.

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Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

        Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of incorporation or our bylaws or any action asserting a claim against us that is governed by the internal affairs doctrine. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may discourage these types of lawsuits. Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.

We intend to pay dividends to our stockholders, but the decisions to declare future dividends on our capital stock will be at the discretion of our board of directors based upon a review of relevant considerations. Accordingly, there can be no guarantee that we will pay future dividends to our stockholders.

        In 2012, our board of directors declared two cash dividend payments of $4.42 and $13.20 per share of outstanding common stock, which were paid in August and December 2012, respectively. In 2014, in accordance with our merger agreement to acquire Direct Edge, we made working capital distributions to stockholders of the company who held shares prior to the acquisition of $3.38 and $0.07 per share, which were paid in January and April 2014, respectively. In addition, in 2014, our board of directors declared cash dividend payments of $4.07, $0.15 and $0.15 per share of outstanding common stock, which were paid in February 2014, October 2014 and January 2015, respectively. In 2015, in accordance with our merger agreement to acquire Direct Edge, we paid a $7.0 million indemnification liability distribution to stockholders of the company who held shares prior to the acquisition. Our board of directors did not declare any dividend payments in 2015. Future declarations of dividends and the establishment of future record and payment dates are subject to approval by our board of directors.

        The board of directors is expected to adopt a policy with respect to the payment of dividends on capital stock following this offering. We currently expect that we will pay quarterly cash dividends following the offering, with the annual amount initially determined based on a payout ratio of earnings within a range of 30-40% of net income. Notwithstanding the current expectations for our future dividend policy, the timing, declaration, amount of, and payment of any dividends is within the discretion of the board of directors and will depend upon many factors, including our financial condition, earnings, corporate strategy, debt covenants, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by the board of directors. Any of these factors, individually or in combination, could restrict the company's ability to pay dividends. Accordingly, there can be no assurance that the board of directors will not reduce the amount of dividends or cause the company to cease paying dividends altogether.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        We have made statements under the captions "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business" and in other sections of this prospectus that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expects," "plans," "anticipates," "could," "believes," "estimates," "predicts," "potential" or "continue," the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under the caption entitled "Risk Factors." You should specifically consider the numerous risks outlined under "Risk Factors."

        Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this prospectus to conform our prior statements to actual results or revised expectations.

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RECENT ACQUISITIONS

Direct Edge Acquisition

        On January 31, 2014, we acquired 100% of the ownership interests of Direct Edge through a merger with former Direct Edge members receiving 30% of equity interest in the newly formed combined company, Bats Global Markets, Inc. The results of Direct Edge's operations have been reflected in the U.S. Equities segment since January 31, 2014.

        Direct Edge developed and operated electronic markets for the trading of listed cash equity securities in the United States. Direct Edge was headquartered in Jersey City, New Jersey and only had operations in the United States. Direct Edge operated two national securities exchanges, EDGX and EDGA, and also operated a routing broker-dealer, Direct Edge ECN LLC, d/b/a DE Route, providing routed transaction services for listed cash equity securities for EDGX and EDGA.

        As of January 12, 2015, the EDGX and EDGA exchange operations were migrated onto the Bats technology platform, or Direct Edge Integration. In conjunction with the Direct Edge Integration, Direct Edge began routing all trades through the Bats' affiliated broker-dealer, Bats Trading, and no longer routed trades through DE Route, which is no longer registered as a broker-dealer and is no longer in operation.

    Strategic rationale

        We believe that our combination with Direct Edge will further our position as a leading global exchange operator. We expect to continue to benefit from synergies as a result of the acquisition, including the Direct Edge Integration, which was completed in the first quarter 2015. We believe the combination has improved our competitive position, enhanced our profitability through scale and cost efficiencies and provides us with additional opportunities to influence market structure developments for the benefit of our customers.

Bats Hotspot Acquisition

        On March 13, 2015, we completed the acquisition of Bats Hotspot from KCG Holdings, Inc. for $365 million in cash at closing and additional contingent consideration payments with an acquisition-date fair value of $62.6 million. KCG Holdings, Inc. is one of our principal investors. The operations of Bats Hotspot are reflected in the Global FX segment since March 13, 2015. Bats Hotspot provides institutional spot FX services through an electronic marketplace where buyers and sellers worldwide can trade directly and anonymously with each other.

        Bats Hotspot provides an independent, transparent electronic marketplace for institutional spot FX trading. The Bats Hotspot Platform includes true price competition with full depth of book display, centralized price discovery, tailored liquidity solutions to suit client needs, a diverse client base of banks, institutions, hedge funds, high frequency traders, corporates and Commodity Trading Advisors, direct and anonymous market access, multiple means of access and flexible real-time and historical market data services. Bats Hotspot's model provides full market transparency and greater control of the trading process, enabling better trade execution and lower execution costs. Bats Hotspot additionally offers separate, private pools of disclosed FX liquidity. Bats Hotspot was headquartered in Jersey City, New Jersey, and has operations in the United States, the United Kingdom and Singapore.

    Strategic rationale

        We believe that our acquisition of Bats Hotspot represents further expansion into non-equity trading businesses for Bats as it enters the world's largest asset class. Approximately half of the FX market is comprised of spot trading and the other half includes forwards, swaps and options. As Bats Hotspot only participates in the institutional spot market, product expansion into the other FX markets

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is a significant opportunity. Large financial institutions comprise a portion of the FX trading market. As these institutions face increased regulatory pressure to provide greater transparency to their clients and to reduce their risk exposure, we expect more trading volume will migrate to electronic platforms, including Bats Hotspot. We believe there are geographic expansion opportunities for Bats Hotspot, which when acquired, operated in a data center located in Jersey City, New Jersey. We have recently expanded its operations by adding trading operations in London, United Kingdom, which is the largest trading center for the FX market. We also recently moved our technology into a stronger trading environment located in Secaucus, New Jersey that hosts a significantly larger number of overall trading participants. In addition to the product and geographic expansion opportunities noted above, we plan to explore additional non-transactional revenue sources including market data and connectivity charges.

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UNAUDITED SELECTED PRO FORMA FINANCIAL DATA

        The following unaudited selected pro forma financial data and explanatory notes are intended to provide information about how the Bats Hotspot Acquisition might have affected our historical consolidated statement of operations had it been consummated as of January 1, 2015. An unaudited pro forma statement of financial condition as of December 31, 2015 is not presented, as Bats Hotspot's statements of financial condition, including related acquisition adjustments, have already been included in our consolidated statement of financial condition and accompanying notes as of December 31, 2015 included elsewhere in this prospectus.

        The following unaudited pro forma condensed combined financial data is provided for informational purposes only and does not necessarily reflect our results of operations or financial position had the acquisition occurred as of the date indicated, nor should it be taken as necessarily indicative of our future results of operation or financial position. The following unaudited pro forma condensed combined financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the accompanying notes included elsewhere in this prospectus.

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Unaudited Pro Forma Condensed Combined Statement of
Operations for the Year Ended December 31, 2015 (under U.S. GAAP)

 
  Bats Global
Markets, Inc.
(Historical)
  KCG Hotspot FX
(Historical)(1)
  Pro Forma
Adjustments(2)
  Bats Global
Markets, Inc.
Pro Forma
 
 
  (in millions, except per share data)
 

Revenues:

                         

Transaction fees

  $ 1,290.2   $ 9.0   $   $ 1,299.2  

Regulatory transaction fees

    275.7             275.7  

Market data fees

    131.0             131.0  

Other

    81.8     0.1         81.9  

Total revenues

    1,778.7     9.1         1,787.8  

Cost of revenues:

   
 
   
 
   
 
   
 
 

Liquidity payments

    1,070.7             1,070.7  

Section 31 fees

    275.7             275.7  

Routing and clearing

    47.9             47.9  

Total cost of revenues

    1,394.3             1,394.3  

Revenues less cost of revenues

    384.4     9.1         393.5  

Operating expenses:

   
 
   
 
   
 
   
 
 

Compensation and benefits

    79.7     4.0     (0.2) (3)   83.5  

Depreciation and amortization

    40.8     1.4     1.9 (4)   44.1  

Change in fair value of contingent consideration liability

    2.8         1.1 (5)   3.9  

General and administrative

    78.8     0.7     (4.5) (3)   75.0  

Total operating expenses

    202.1     6.1     (1.7 )   206.5  

Operating income

    182.3     3.0     1.7     187.0  

Interest expense, net

    (46.6 )       (1.8) (6)   (48.4 )

Other income (loss)

    3.0         (1.0) (7)   2.0  

Income (loss) before income tax provision

    138.7     3.0     (1.1 )   140.6  

Income tax provision (benefit)

    56.5     1.1     (0.3) (8)   57.3  

Net income (loss)

  $ 82.2   $ 1.9   $ (0.8 ) $ 83.3  

Earnings per share:

                         

Basic

  $ 2.53       *     * $ 2.56  

Diluted

  $ 2.51       *     * $ 2.55  

Weighted average shares outstanding:

                         

Basic

    32.5       *     *   32.5  

Diluted

    32.7       *     *   32.7  

*
Not meaningful.

(1)
Reflects the historical results of operations of Bats Hotspot for the period from January 1, 2015 to March 12, 2015.

(2)
Represents the effect of the Bats Hotspot Acquisition as if the acquisition had occurred on January 1, 2015.

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(3)
Represents all acquisition-related costs, such as fees to investment bankers, attorneys, accountants and other professional advisors and severance to employees, of $4.7 million for the year ended December 31, 2015.

(4)
Represents annual amortization of identifiable intangible assets as a result of the Bats Hotspot Acquisition. Amortization of identifiable intangible assets is based on the discounted cash flow method applied over the respective useful lives of the assets.

(5)
Represents the effects of the fair market value adjustment of the contingent consideration liability recorded in connection with the Bats Hotspot Acquisition. The fair market value is based on the discounted cash flow method of the probable future payment.

(6)
Represents additional interest expense as a result of the modified and incremental debt issued to finance the Bats Hotspot Acquisition.

(7)
Eliminates the gain recognized upon payment of the revolving credit facility in connection with the Bats Hotspot Acquisition.

(8)
Represents the income tax benefit of the pro forma adjustments.

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Notes to the Unaudited Pro Forma
Condensed Combined Statement of Operations
(unaudited)

1.     Basis of Presentation

        The Bats Hotspot Acquisition is accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification, or ASC, Topic 805-10, "Business Combinations—Overall," or ASC 805-10. We have accounted for the transaction by using our historical information and accounting policies and adding the assets and liabilities of Bats Hotspot as of the acquisition date at their fair values. Pursuant to ASC 805-10, under the acquisition method, the total purchase price (consideration transferred), as described in Note 3, Purchase Price Allocation, is measured at the acquisition closing date. The assets and liabilities of Bats Hotspot have been measured based on various estimates and valuations using assumptions that our management believes are reasonable utilizing information currently available. Use of different estimates and judgments could yield different results.

        The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price (consideration transferred) over the estimated amounts of identifiable assets and liabilities of Bats Hotspot as of the effective date of the acquisition was allocated to goodwill in accordance with ASC 805-10.

        Under ASC 805-10, acquisition-related transaction costs (e.g., investment banking, advisory, legal, valuation, and other professional fees) are not included as a component of consideration transferred but are required to be expensed as incurred.

2.     Accounting Policies

        Upon completion of the acquisition, we reviewed Bats Hotspot's accounting policies and identified differences in accounting policies. The unaudited pro forma condensed combined statement of operations reflects adjustments to conform Bats Hotspot's results to record certain referral fees.

3.     Purchase Price Allocation

    Bats Hotspot

        The acquisition-date fair value of the consideration transferred totaled $430.1 million, which consisted of the following (in millions):

Cash paid at closing

  $ 365.0  

Contingent consideration liability

    62.6 (a)

Working capital payment

    2.5  

Total consideration to former Bats Hotspot stockholders

  $ 430.1  

(a)
Consistent with ASC 805, we estimated the fair value of the contingent consideration liability based on an evaluation of alternative scenarios relating to the probability of the company generating sufficient taxable income to reorganize the tax benefits and the likelihood that the settlement option would be exercised after three years. The evaluation of these factors resulted in a probability-weighted forecast of the contingent consideration liability, which was then discounted to present value using an appropriate discount rate that reflects the risk associated with the cash flows. The sum of the present value of the contingent consideration liability amounts represented our estimate of the fair value of the contingent consideration.

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        Under the purchase method of accounting, the total purchase price for the Bats Hotspot Acquisition is allocated to acquired tangible and intangible assets based on their respective fair values as of the acquisition date as determined by us and a third-party valuation firm. The allocation of the purchase price and the estimated useful life of the acquired intangible assets is as follows:

 
  Purchase Price
Allocation
(in millions)
  Estimated
Useful Life
(in years)
 

Customer relationships

  $ 81.2     18  

Technology

    12.6     6  

Non-compete agreements

    1.9     1  

Trade name

    15.3     Indefinite  

Total acquired intangible assets

    111.0        

Goodwill

    308.2        

Total intangible assets

    419.2        

Current assets

    11.8        

Property and equipment

    0.3        

Liabilities

    (1.2 )      

Total cost of acquisition

  $ 430.1        

        Of the total purchase price, approximately $10.9 million has been allocated to net tangible assets and working capital acquired, and approximately $95.7 million has been allocated to amortizable intangible assets acquired. The amortization related to the amortizable intangible assets is reflected as a pro forma adjustment to the unaudited pro forma condensed combined consolidated statement of operations.

        Of the total estimated purchase price, approximately $308.2 million has been allocated to goodwill. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net tangible and intangible assets.

        In accordance with ASC 350, Intangibles—Goodwill and Other, goodwill is not amortized but instead is tested for impairment on an annual basis and whenever events or circumstances dictate. In the event that we determine that the value of goodwill has become impaired, we will incur an accounting charge for the amount of impairment during the fiscal quarter in which the determination is made.

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USE OF PROCEEDS

        We will not receive any proceeds from the sale of our common stock by the selling stockholders in this offering, including any shares sold by certain of the selling stockholders in connection with the exercise of the underwriters' option to purchase additional shares.


DIVIDEND POLICY

        The board of directors is expected to adopt a policy with respect to the payment of dividends on capital stock following this offering. We currently expect that we will pay quarterly cash dividends following the offering, with the annual amount initially determined based on a payout ratio of earnings within a range of 30-40% of net income. Notwithstanding the current expectations for our future dividend policy, the timing, declaration, amount, and payment of any dividends is within the discretion of the board of directors and will depend upon many factors, including our financial condition, earnings, corporate strategy, debt covenants, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by the board of directors.

        In 2012, our board of directors declared two cash dividend payments of $4.42 and $13.20 per share of outstanding common stock, which were paid in August and December 2012, respectively. In 2014, in accordance with our merger agreement to acquire Direct Edge, we made working capital distributions to stockholders of the company who held shares prior to the acquisition of $3.38 and $0.07 per share, which were paid in January and April 2014, respectively. In addition, in 2014, our board of directors declared cash dividend payments of $4.07, $0.15 and $0.15 per share of outstanding common stock, which were paid in February 2014, October 2014 and January 2015, respectively. In 2015, in accordance with our merger agreement to acquire Direct Edge, we paid a $7.0 million indemnification liability distribution to stockholders of the company who held shares prior to the acquisition. Our board of directors did not declare any dividend payments in 2015. Future declarations of dividends and the establishment of future record and payment dates are subject to approval by our board of directors.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents, financial investments and capitalization as of December 31, 2015:

    on an actual basis; and

    on a pro forma basis to reflect the filing of our amended and restated certificate of incorporation, our reclassification and 1-for-2.91 stock split to be consummated immediately prior to the completion of this offering, as described under "Prospectus Summary—Reclassification and Stock Split."

        This table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and notes thereto appearing elsewhere in this prospectus.

 
  December 31, 2015  
 
  Actual   Pro Forma(1)  
 
  (unaudited)
 
 
  (in millions, except share data)
 

Cash and cash equivalents

  $ 75.1   $ 75.1  

Financial investments

    47.7     47.7  

Debt

  $ 687.5   $ 687.5  

Stockholders' equity:

             

Common stock, $0.01 par value: 55,000,000 shares authorized, 25,770,322 shares issued and 25,612,852 shares outstanding, actual; 362,500,000 shares authorized, 83,985,615 shares issued and 83,527,269 outstanding on a pro forma basis

    0.3     0.3  

Non-Voting Class A common stock, par value $0.01 per share: 10,000,000 shares authorized, 3,090,714 shares issued and outstanding, actual; no shares authorized, issued and outstanding on a pro forma basis

         

Non-Voting Class B common stock, par value $0.01 per share: 10,000,000 shares authorized, 4,176,000 shares issued and outstanding, actual; no shares authorized, issued and outstanding on a pro forma basis

         

Non-voting common stock, $0.01 par value: no shares authorized, issued and outstanding, actual; 29,000,000 shares authorized, 12,152,158 shares issued and outstanding on a pro forma basis

         

Treasury stock

    (6.5 )   (6.5 )

Additional paid-in capital

    271.3     271.3  

Retained earnings

    125.0     125.0  

Accumulated other comprehensive loss, net

    (10.2 )   (10.2 )

Total stockholders' equity

    379.9     379.9  

Total capitalization

  $ 1,067.4   $ 1,067.4  

(1)
Immediately prior to the completion of this offering and before effecting the stock split, we intend to reclassify each share of our Class A non-voting common stock as one share of common stock. We also intend to reclassify each share of our Class B non-voting common stock as one share of non-voting common stock. We then intend to effect a 1-for-2.91 stock split. Each share of common stock will be entitled to one vote per share. Non-voting common stock will not be entitled to vote, except as required by applicable law. See "Prospectus Summary—Reclassification and Stock Split" and "Description of Capital Stock."


See "Prospectus Summary—The Offering" for a description of those shares that are or are not reflected as outstanding shares on a pro forma basis in the table above.

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DILUTION

        Dilution is the amount by which the portion of the offering price paid by the purchasers of our common stock in this offering exceeds the net tangible book deficit per share of our common stock after the offering. Our net tangible book deficit as of December 31, 2015 was $(600.4) million, or $(6.28) per share of common stock after giving effect to the reclassification and 1-for-2.91 stock split to be consummated immediately prior to the completion of this offering. Pro forma net tangible book deficit per share is determined by dividing our tangible net worth (total tangible assets less total liabilities) by the aggregate number of shares of common stock and non-voting common stock outstanding upon the consummation of the offering after giving effect to our reclassification and 1-for-2.91 stock split to be consummated immediately prior to the completion of this offering. Our pro forma net tangible book deficit at December 31, 2015 would have been $(600.4) million or $(6.28) per share. This represents dilution to new investors of $24.28 per share. The following table illustrates this per share dilution:

Assumed initial public offering price per share of common stock

        $ 18.00  

Pro forma net tangible book deficit per share as of December 31, 2015

  $ (6.28 )      

Reduction in pro forma net tangible book deficit per share attributable to new investors

           

Pro forma net tangible book deficit per share after offering

        $ (6.28 )

Dilution in net tangible book deficit per share of common stock to new investors

        $ 24.28  

        Dilution is determined by subtracting pro forma net tangible book deficit per share of common stock after the offering from the initial public offering price per share of common stock.

        The following table sets forth, on a pro forma basis, as of December 31, 2015, the number of shares of common stock purchased, the total consideration paid, or to be paid, and the average price per share paid, or to be paid, by existing stockholders and by the new investors, at an assumed initial public offering price of $18.00 per share of common stock, the mid-point of the range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and offering expenses:

 
   
   
  Total
Consideration
   
 
 
  Shares Purchased    
 
 
  Average Price
Per Share
 
 
  Number   Percent   Amount   Percent  

Existing stockholders

    95,679,427     87.8 % $ 817,120,969     77.3 % $ 8.54  

New investors

    13,300,000     12.2 %   239,400,000     22.7 % $ 18.00  

        Sales by the selling stockholders in this offering will reduce the number of shares of common stock held by existing stockholders to 82,379,427, or approximately 86.1%, and will increase the number of shares of common stock to be purchased by new investors to 13,300,000 or approximately 13.9%, of the total shares of common stock outstanding after the offering. In addition, existing stockholders will hold 100% of the non-voting common stock.

        As of December 31, 2015, after giving effect to the reclassification and 1-for-2.91 stock split, 1,946,038 shares of common stock were subject to outstanding options, which represents stock options outstanding as of December 31, 2015 with a weighted average exercise price of $8.65 per share. As of December 31, 2015, after giving effect to the reclassification and stock split, 87,699,410 shares of common stock were outstanding, which included 887,778 shares of unvested restricted stock. To the extent these options are exercised there will be further dilution to new investors. See "Executive Compensation—Description of Equity Incentive Plans" and Note 18 to our consolidated financial statements included elsewhere in this prospectus.

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SELECTED FINANCIAL AND OPERATING DATA

        The following selected financial and operating data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the accompanying notes included elsewhere in this prospectus. We have derived the consolidated statements of operations data for the years ended December 31, 2015, 2014 and 2013 and the consolidated statements of financial condition data as of December 31, 2015 and 2014 from our audited consolidated financial statements and related notes included elsewhere in this prospectus. We have derived the consolidated statements of operations data for the years ended December 31, 2012 and 2011 and the consolidated statements of financial condition data as of December 31, 2013, 2012 and 2011 from our audited consolidated financial statements which are not included in this prospectus. We have included, in our opinion, all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of this financial information.

 
  Year Ended December 31,  
 
  2015   2014   2013   2012   2011  
 
  (in millions, except per share data)
 

Consolidated Statements of Operations Data:

                               

Revenues:

                               

Transaction fees

  $ 1,290.2   $ 1,009.9   $ 612.8   $ 645.3   $ 695.4  

Regulatory transaction fees(1)

    275.7     272.0     127.4     148.1     156.4  

Market data fees

    131.0     110.3     59.4     60.3     55.6  

Port fees and other

    81.8     66.0     41.9     31.0     19.2  

Total revenues

    1,778.7     1,458.2     841.5     884.7     926.6  

Cost of revenues:

                               

Liquidity payments

    1,070.7     831.4     474.7     508.2     566.1  

Section 31 fees(1)

    275.7     272.0     127.4     148.1     156.4  

Routing and clearing

    47.9     47.3     42.6     51.5     76.1  

Total cost of revenues

    1,394.3     1,150.7     644.7     707.8     798.6  

Revenues less cost of revenues

    384.4     307.5     196.8     176.9     128.0  

Operating expenses:

                               

Compensation and benefits

    79.7     87.0     41.5     48.4     42.9  

Depreciation and amortization

    40.8     28.4     15.2     17.0     8.4  

Systems and data communication

    27.2     23.5     9.6     11.9     10.1  

Occupancy

    3.1     4.2     1.9     2.3     1.5  

Professional and contract services

    11.1     6.5     8.1     9.2     10.3  

Regulatory costs

    11.1     12.1     5.4     5.7     5.5  

Change in fair value of contingent consideration liability

    2.8             12.4     0.3  

Impairment of assets

            3.5     0.2      

General and administrative

    26.3     26.2     10.0     10.5     10.7  

Total operating expenses

    202.1     187.9     95.2     117.6     89.7  

Operating income

    182.3     119.6     101.6     59.3     38.3  

Interest (expense) income, net

    (46.6 )   (27.3 )   (25.8 )   (0.6 )   0.1  

Loss on extinguishment of debt

        (13.6 )            

Equity in earnings in EuroCCP

    1.2     1.1              

Other income (expense)

    1.8     0.5     (0.2 )   (0.6 )   (0.1 )

Income before income tax provision

    138.7     80.3     75.6     58.1     38.3  

Income tax provision

    56.5     31.1     28.8     26.5     14.8  

Net income

  $ 82.2   $ 49.2   $ 46.8   $ 31.6   $ 23.5  

Earnings per share:

                               

Basic

  $ 2.53   $ 1.56   $ 2.07   $ 1.40   $ 1.29  

Diluted

  $ 2.51   $ 1.55   $ 2.06   $ 1.39   $ 1.26  

Weighted average shares outstanding:

                               

Basic

    32.5     31.6     22.6     22.5     18.2  

Diluted

    32.7     31.8     22.7     22.7     18.7  

Distributions per share

  $   $ 7.82   $   $ 17.62   $  

(1)
As national securities exchanges, BZX, BYX, EDGX and EDGA are assessed fees pursuant to Section 31 of the Exchange Act. Section 31 fees are assessed on the notional value traded and are designed to recover the costs to the government of supervision and regulation of securities markets and securities professionals. Section 31 fees are paid

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    directly to the SEC, and our national securities exchanges then pass these costs along to our members as regulatory transaction fees, recognizing these amounts as incurred in cost of revenues and revenues, respectively.

 
  As of December 31,  
 
  2015   2014   2013   2012   2011  
 
  (in millions)
 

Consolidated Statements of Financial Condition Data:

                               

Assets:

                               

Cash and cash equivalents

  $ 75.1   $ 122.2   $ 87.2   $ 82.5   $ 99.4  

Financial investments

    47.7     68.4     25.2     29.8     151.7  

Goodwill and intangible assets, net

    980.3     598.2     247.0     251.9     246.9  

Total assets

  $ 1,316.9   $ 1,006.6   $ 456.9   $ 469.6   $ 594.9  

Liabilities and stockholders' equity:

                               

Long-term debt

  $ 687.5   $ 474.4   $ 246.0   $ 287.6   $  

Total liabilities

    937.0     702.4     316.9     381.9     148.3  

Total stockholders' equity

    379.9     304.2     140.0     87.7     446.6  

Total liabilities and stockholders' equity           

  $ 1,316.9   $ 1,006.6   $ 456.9   $ 469.6   $ 594.9  

Selected Operating Data

        The following table presents selected operating data for U.S. Equities, European Equities, U.S. Options and Global FX for the periods presented. Direct Edge, which is reported in our U.S. Equities segment, was acquired in January 2014. Bats Hotspot, which is reported in our Global FX segment, was acquired in March 2015. The information set forth below is not necessarily indicative of our future operations and should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations."

 
  Year Ended December 31,  
 
  2015   2014   2013  
 
  (in billions except for
trading days, percentages
and as noted below)

 

U.S. Equities:

                   

Average daily volume (ADV) (in billions of shares):

                   

Matched shares

    1.5     1.2     0.6  

Routed shares

    0.1     0.1     0.1  

Total touched shares

    1.6     1.3     0.7  

Market ADV

    6.9     6.4     6.2  

Number of trading days

    252     252     252  

Net capture per one hundred touched shares(1)

  $ 0.021   $ 0.022   $ 0.024  

Market share(2)

    21.1 %   19.4 %   10.4 %

European Equities:

                   

Matched and touched ADNV (in billions)

  12.4   8.6   7.5  

Market ADNV (in billions)

  50.8   39.7   32.6  

Number of trading days

    257     256     256  

Net capture per matched notional value (in basis points)(1)

    0.133     0.162     0.167  

Market share(2)

    24.4 %   21.6 %   23.1 %

U.S. Options:

                   

ADV (in millions of contracts):

                   

Matched contracts

    1.5     0.8     0.6  

Routed contracts

    0.1          

Total touched contracts

    1.6     0.8     0.6  

Market ADV

    16.1     16.6     15.9  

Number of trading days

    252     252     252  

Net capture per touched contract(1)

  $ 0.030   $ 0.046   $ 0.058  

Market share(2)

    9.6 %   4.8 %   3.7 %

Global FX:

                   

ADNV (in billions)

  $ 25.8              *            *

Number of trading days

    209       *     *

Net capture per one million dollars traded(1)

  $ 2.95              *            *

*
Not meaningful

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(1)
Please see the glossary for our definitions of "net capture per one hundred touched shares," "net capture per matched notional value," "net capture per touched contract" and "net capture per one million dollars traded."

(2)
Please see the glossary for our definition of "market share."

 
  Year Ended December 31,  
 
  2015   2014   2013   2012   2011  
 
  (in millions except for percentages, earnings per share and exchange rates)
 

Other Data:

                               

EBITDA(1)

  $ 226.1   $ 136.0   $ 116.6   $ 75.7   $ 46.6  

EBITDA margin(2)

    58.8 %   44.2 %   59.2 %   42.8 %   36.4 %

Normalized EBITDA(1)

  $ 235.3   $ 168.1   $ 124.1   $ 101.3   $ 60.3  

Normalized EBITDA margin(3)

    61.2 %   54.7 %   63.1 %   57.3 %   47.1 %

Adjusted earnings(4)

  $ 103.6   $ 75.2   $ 55.1   $ 49.1     32.1  

Adjusted earnings margin(5)

    27.0 %   24.5 %   28.0 %   27.8 %   25.1 %

Diluted Adjusted earnings per share(6)

  $ 3.17   $ 2.37   $ 2.42   $ 2.16   $ 1.71  

Non-transaction revenue as a percentage of revenues less cost of revenues(7)

    55.4 %   57.3 %   51.5 %   51.6 %   58.4 %

Capital expenditures

  $ 13.9   $ 25.2   $ 3.6   $ 6.9   $ 9.6  

Average British pound/U.S. dollar exchange rate

  $ 1.5283   $ 1.6476   $ 1.5643   $ 1.5847   $ 1.6039  

Average Euro/U.S. dollar exchange rate

  $ 1.1101   $ 1.3290   $ 1.3280   $ 1.2858   $ 1.3924  

Average Euro/British pound exchange rate

  £ 0.7263   £ 0.8062   £ 0.8489   £ 0.8112   £ 0.8678  

(1)
"EBITDA" is defined as income before interest, income taxes, depreciation and amortization. Normalized EBITDA is defined as EBITDA before acquisition-related costs, IPO costs, loss of extinguishment of debt, debt restructuring costs, intangible asset impairment charges, gain on extinguishment of revolving credit facility and an unusually large regulatory assessment charged to a member in 2013. EBITDA and Normalized EBITDA do not represent, and should not be considered as, alternatives to net income or cash flows from operations, each as determined in accordance with U.S. GAAP. We have presented EBITDA and Normalized EBITDA because we consider them important supplemental measures of our performance and believe that they are frequently used by analysts, investors and other interested parties in the evaluation of companies. In addition, we use Normalized EBITDA as a measure of operating performance for preparation of our forecasts, evaluating our leverage ratio for the debt to earnings covenant included in our outstanding credit facility and calculating employee and executive bonuses. Other companies may calculate EBITDA and Normalized EBITDA differently than we do. EBITDA and Normalized EBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP.

    The following is a reconciliation of net income to EBITDA and Normalized EBITDA:

 
  Year Ended December 31,  
 
  2015   2014   2013   2012   2011  
 
  (in millions)
 

Net income

  $ 82.2   $ 49.2   $ 46.8   $ 31.6   $ 23.5  

Interest

    46.6     27.3     25.8     0.6     (0.1 )

Income tax provision

    56.5     31.1     28.8     26.5     14.8  

Depreciation and amortization

    40.8     28.4     15.2     17.0     8.4  

EBITDA

    226.1     136.0     116.6     75.7     46.6  

Acquisition-related costs

    8.2     18.5     5.2     19.3     11.4  

IPO costs

    1.5         0.6     6.3     2.3  

Loss on extinguishment of debt

        13.6              

Impairment of intangible assets

            3.5          

Debt restructuring

    0.5                  

Gain on extinguishment of revolving credit facility

    (1.0 )                

Regulatory assessment

            (1.8 )        

Normalized EBITDA

  $ 235.3   $ 168.1   $ 124.1   $ 101.3   $ 60.3  
(2)
EBITDA margin represents EBITDA divided by revenues less cost of revenues.

(3)
Normalized EBITDA margin represents Normalized EBITDA divided by revenues less cost of revenues.

(4)
"Adjusted earnings" is defined as net income adjusted for amortization, net of tax and other items, including acquisition-related costs, IPO costs, loss on extinguishment of debt, debt restructuring costs, intangible asset impairment charges, gain on extinguishment of revolving credit facility and an unusually large regulatory assessment charged to a member in 2013, net of tax. Adjusted earnings does not represent, and should not be considered as, an alternative to net income, as determined in accordance with U.S. GAAP. We have presented Adjusted earnings because we consider it an important supplemental measure of our performance and we use it as the basis for monitoring our own core operating financial performance relative to other operators of electronic exchanges. We

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    also believe that it is frequently used by analysts, investors and other interested parties in the evaluation of companies. We believe that investors may find this non-GAAP measure useful in evaluating our performance compared to that of peer companies in our industry. Other companies may calculate Adjusted earnings differently than we do. Adjusted earnings has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

    The following is a reconciliation of net income to Adjusted earnings:

 
  Year Ended December 31,  
 
  2015   2014   2013   2012   2011  
 
  (in millions)
 

Net income

  $ 82.2   $ 49.2   $ 46.8   $ 31.6   $ 23.5  

Amortization

    26.9     10.3     5.9     6.7     0.4  

Tax effect of amortization

    (11.0 )   (4.0 )   (2.2 )   (3.1 )   (0.2 )

Acquisition-related costs

    8.2     18.5     5.2     19.3     11.4  

IPO costs

    1.5         0.6     6.3     2.3  

Loss on extinguishment of debt

        13.6              

Impairment of intangible assets

            3.5          

Debt restructuring

    0.5                  

Gain on extinguishment of revolving credit facility

    (1.0 )                

Regulatory assessment

            (1.8 )        

Tax effect of other items

    (3.7 )   (12.4 )   (2.9 )   (11.7 )   (5.3 )

Adjusted earnings

  $ 103.6   $ 75.2   $ 55.1   $ 49.1   $ 32.1  
(5)
Adjusted earnings margin represents Adjusted earnings divided by revenues less cost of revenues.

(6)
Diluted Adjusted earnings per share represents Adjusted earnings divided by diluted weighted average shares outstanding.

(7)
"Non-transaction revenue as a percentage of revenues less cost of revenues" is defined as all revenue not directly related to transaction fees divided by revenues less cost of revenues.

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto included in this prospectus. The following discussion contains forward-looking statements. Actual results could differ materially from the results discussed in the forward-looking statements. See "Risk Factors" and "Special Note Regarding Forward-Looking Statements" above.

Overview

        We are a leading global operator of securities exchanges and other electronic markets enabled by world-class technology. We provide trade execution, market data, trade reporting, connectivity and risk management solutions to brokers, market makers, asset managers and other market participants, ultimately benefiting retail and institutional investors across multiple asset classes. Our principal objective is to improve markets by maximizing efficiency and mitigating trade execution risk for market participants. Our asset class focus currently comprises listed cash equity securities in the United States and Europe, listed equity options in the United States and institutional spot FX globally, as well as ETPs, including ETFs, in the United States and Europe. Trade execution comprised 44.6% of our revenues less cost of revenues, and market data and connectivity, or non-transaction revenues, comprised 55.4% of our revenues less cost of revenues for the year ended December 31, 2015.

        We are the second largest exchange operator in U.S. listed cash equity securities trading by market share, the largest exchange operator of ETFs and other ETPs by market share, and the largest European exchange operator as measured by notional value traded as of December 31, 2015. In addition, for each of the six consecutive months ended December 31, 2015, excluding the Chinese exchanges, we were the largest equities market operator globally as measured by notional value traded. Moreover, during 2015 we operated the fastest growing market in the United States for exchange traded options as measured by market share.

        We improve markets by maximizing efficiency and mitigating trade execution risk, in part by offering low-cost, market-leading pricing and low-latency trade execution enabled by resilient and robust proprietary technology. For example, during the year ended December 31, 2015, our net capture, including auctions, in the U.S. equities market was approximately 42% of the rate reported by NASDAQ Group's U.S. equities operations and Intercontinental Exchange's NYSE operations, while our net capture, including auctions, in the European listed equity securities market was approximately 25% of the rate reported by the London Stock Exchange's European equities operations. During the year ended December 31, 2015, our net capture in the U.S. listed equity options market was 8% to 19% of the rate reported by CBOE, NYSE Arca, NYSE MKT, NASDAQ Options Market and NASDAQ PHLX. We offer the same low-cost, market-leading pricing for our market data products. During the year ended December 31, 2015, our pricing for market data for the U.S. equities market was a combined $12,500 per month for data from BZX, BYX, EDGX and EDGA. This is approximately 8% of the prices reported by NYSE and NASDAQ operations to receive data for all of their respective markets during the same period. Our market data pricing in Europe was €59.50 per month for pan-European data during the year ended December 31, 2015. This is approximately 11% of the cost of receiving data from the other exchanges across Europe during the same period. Participants can also purchase our FX market data for $5,000 per month. This is approximately 8% of the price currently charged by EBS Market.

        We develop, own and operate the Bats trading platforms, which deploy our proprietary technology designed to offer some of the fastest and most reliable trading systems available. For the year ended December 31, 2015, we had a 21.1% share of the overall U.S. equity market, a 22.4% share of the trading of ETPs and a 9.6% share of the U.S. equity options market. In Europe, for the year ended

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December 31, 2015, we had a 24.4% share of European trading in the securities available for trading on Bats Europe. In addition, we had $25.8 billion ADNV in our Global FX segment from the Bats Hotspot Acquisition from March 13, 2015 to December 31, 2015. Globally, for the year ended December 31, 2015, we had an 11.1% share of the publicly reported institutional spot FX market, as reported by Bats Hotspot, ICAP and Thomson Reuters. Pro forma for the acquisition of Bats Hotspot for the year ended December 31, 2015, we would have derived 77.6% of our total revenues from the trading of U.S. listed cash equities securities, 13.5% of our total revenues from the trading of U.S. listed equity options, 6.6% of our total revenues from the trading of European listed cash equities securities and 2.3% of our total revenues from trading globally of institutional spot FX.

        Our revenue is primarily tied to the volume of securities traded on our markets and our market share of trading in the overall U.S. and European equity markets, the U.S. equity options market and the global FX market. Trading volume on our markets can be influenced by a number of factors, including overall market volatility. Our revenue increased from $926.6 million in 2011 to $1,778.7 million in 2015. This revenue growth is attributable to our increased market share and increased overall market volume, the introduction of new products and services, and strategic acquisitions of Chi-X Europe, Direct Edge and Bats Hotspot.

        For the two months ended February 29, 2016, we had a 21.4% share of the overall U.S. equity market, a 24.5% share of the trading of ETPs and a 10.2% share of the U.S. equity options market. For ETPs, during the two months ended February 29, 2016, we had 13 new listings, or 50.0% of all newly listed ETPs in the United States. We also had 69 total listings as of February 29, 2016, or 3.7% of all listings in the United States. In Europe, for the two months ended February 29, 2016, we had a 24.3% share of European trading in the securities available for trading on Bats Europe. In addition, for the two months ended February 29, 2016, we had $31.7 billion ADNV in our Global FX segment and 12.0% of the publicly reported institutional spot FX market.

        Our revenue consists primarily of transaction fees, regulatory fees, market data fees and port fees. On a consolidated basis, our revenues less cost of revenues were $384.4 million for the year ended December 31, 2015, which represents a 25.0% increase from the $307.5 million generated for the year ended December 31, 2014. Non-transaction revenues were 55.4% of revenues less cost of revenues for the year ended December 31, 2015. Adjusting for growth through acquisitions, our organic compound annual growth rate of revenues less cost of revenue for the last four years was 12.4%. For the year ended December 31, 2015, our Normalized EBITDA margin was 61.2%, compared to 54.7% for the year ended December 31, 2014. We also use the non-GAAP measure of Normalized EBITDA margin to measure our performance. Normalized EBITDA margin is a non-GAAP measure that is reconciled to net income in the section titled "Summary Historical and Pro Forma Financial and Operating Data."

History

        We were formed in 2005 as an alternative to the NYSE and NASDAQ in response to increased consolidation among U.S. listed cash equity market centers. In January 2006, we launched our ECN, a type of ATS, which initially focused on the trading of NASDAQ-listed securities and in May 2006 we expanded to include trading of American Stock Exchange (now NYSE MKT)-listed securities. In February 2007, we expanded to include trading of NYSE-listed securities.

        In November 2008, we converted our ECN to a national securities exchange, BZX, which allowed us to participate in and earn market data fees from the U.S. tape plans, reduce our clearing costs and operate a primary listings business. In order to grow our market share of the U.S. equity market, we launched BYX, a national securities exchange, in October 2010. Like BZX, BYX offers trading in listed cash equity securities and ETPs, such as ETFs, but BYX targets different market segments than BZX by offering alternative pricing. In January 2014, we acquired Direct Edge, which operated two national securities exchanges, EDGX and EDGA. For the year ended December 31, 2015, our exchanges

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combined had a 21.1% share of the U.S. equity market, and we were the second largest exchange operator in the United States after Intercontinental Exchange (operator of the NYSE).

        In February 2010, in the United States, we began trading U.S. listed equity options on BZX. In order to grow our market share of the U.S. listed equity options market, we launched an additional options exchange on EDGX in November 2015. For the year ended December 31, 2015, we had a 9.6% share of the U.S. options market.

        Seeking to compete on a pan-European basis against competing national exchanges, we launched our European MTF in October 2008. In November 2011, we acquired Chi-X Europe, then the operator of the largest pan-European MTF. The merged entity became an RIE in May 2013, operating both an MTF and an RM. Bats Europe offers secondary trading in over four thousand European listed cash equity securities, in addition to ETFs, exchange-traded commodities and international depositary receipts. In December 2013, we acquired a 25% interest in EuroCCP. For the year ended December 31, 2015, Bats Europe had a 24.4% share of European trading in the securities available for trading on Bats Europe and was the largest pan-European equities exchange in terms of notional market share. Bats Europe also offer Bats Europe Trade Reporting, or BXTR, the largest European OTC equities trade reporting facility launched in 2013.

        In March 2015, we acquired Bats Hotspot and entered into the institutional spot FX market with a New York area based matching engine. In September 2015, we launched a second FX matching engine near London, complementing Bats Hotspot's New York area matching engine and giving investors two distinct pools of liquidity to drive price formation globally. From the acquisition date of March 13, 2015 to December 31, 2015, our ADNV on the Bats Hotspot market was $25.8 billion.

Business Segments

        We currently operate along four business segments. Our management allocates resources, assesses performance and manages our business according to these segments:

    U.S. Equities.  Our U.S. Equities segment includes listed cash equities and exchange-traded product transaction services that occur on BZX, BYX, EDGX and EDGA. It also includes the listed cash equities routed transaction services that occur on our wholly owned subsidiary, Bats Trading. For the year ended December 31, 2015, our U.S. Equities segment represented 78.0% of our total revenues. Pro forma for the acquisition of Bats Hotspot, our U.S. Equities segment would have represented 77.6% of our total revenues for the year ended December 31, 2015.

    European Equities.  Our European Equities segment includes pan-European cash equities transaction services, ETFs, exchange-traded commodities and international depository receipts that occur on our MTF, and a listing and trading venue on our RM, which together we refer to as Bats Europe. Our European Equities segment represented 6.6% of our total revenues for the year ended December 31, 2015. Pro forma for the acquisition of Bats Hotspot, our European Equities segment would have represented 6.6% of our total revenues for the year ended December 31, 2015.

    U.S. Options.  Our U.S. Options segment includes our listed equity options markets on BZX and EDGX. It also includes the listed equity options routed transaction services that occur on Bats Trading. Our U.S. Options segment represented 13.6% of our total revenues for the year ended December 31, 2015. Pro forma for the acquisition of Bats Hotspot, our U.S. Options segment would have represented 13.5% of our total revenues for the year ended December 31, 2015.

    Global FX.  Our Global FX segment includes the operations of the Bats Hotspot institutional spot FX market acquired in March 2015. Our Global FX segment represented 1.8% of our total revenues for the year ended December 31, 2015. Pro forma for the acquisition of Bats Hotspot,

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      our Global FX segment would have represented 2.3% of our total revenues for the year ended December 31, 2015.

Significant Recent Transactions Affecting Our Results of Operations

    2012 Loan

        On December 19, 2012, we entered into (i) a term loan agreement in the amount of $300 million and (ii) revolving loans not to exceed $50 million, which we refer to collectively as the 2012 Loan. The proceeds received from the term loan were used to pay a $298.9 million dividend, or $13.20 per share, to all stockholders of Bats Global Markets, Inc. during the fourth quarter of 2012. The term of the loan was six years ending on December 19, 2018 with a variable interest rate based on one-month LIBOR (with a floor of 125 basis points) plus a spread of 575 basis points. The original issue discount was $12.5 million, or approximately 4.2%. The revolving loans had similar interest rates and a three-year term, ending on December 19, 2015. We incurred $7.1 million of debt issuance costs, which was capitalized and was being amortized over the term of the loans. The 2012 Loan was extinguished with proceeds from the 2014 Loan described below.

    Direct Edge Acquisition

        On January 31, 2014, we acquired 100% of the ownership interests of Direct Edge, which we refer to as the Direct Edge Acquisition. We expect to benefit from various synergies as a result of the acquisition, including compensation and benefits expenses and systems and data communication expenses as a result of our recent technology integration migrating the trading platform of the Direct Edge legacy exchanges to the Bats technology, which occurred in January 2015. We also intend to benefit from the ability to offer a wider range of pricing options and more valuable market data as our market share increased with the acquisition. We incurred approximately $0.8 million and $18.5 million in acquisition-related costs during the years ended December 31, 2015 and 2014, respectively.

    2014 Loan

        Upon consummation of the Direct Edge Acquisition on January 31, 2014, we entered into (i) a term loan agreement in the amount of $470 million and (ii) revolving loans not to exceed $100 million, which we refer to collectively as the 2014 Loan. The proceeds received from the 2014 Loan were used to extinguish the 2012 Loan, pay a $132.9 million dividend, or $4.07 per share, to our stockholders and for other corporate purposes. The 2012 Loan, related debt issuance costs and debt discount were extinguished, resulting in a loss of $13.6 million that was recorded in non-operating expense on the statement of income. The term of the 2014 Loan is six years ending on January 31, 2020 with variable interest rate based on one-month LIBOR (with floor of 100 basis points) plus a spread of 400 basis points (375 if leverage ratio falls below 2.25). The original issue discount was $1.2 million, or approximately 0.25%. The revolving loans have an interest rate of LIBOR plus 350 basis points and a three-year term, ending on January 31, 2017. The fee on the undrawn portion of the revolver is 0.5% and principal payments on outstanding balances are made on a quarterly basis. We incurred $8.3 million of debt issuance costs, which was capitalized and is being amortized over the term of the loans.

        Upon consummation of the Bats Hotspot Acquisition, we amended our 2014 Loan (the "Amended 2014 Loan"). The Amended 2014 Loan increased the spread on the variable interest rate from 400 basis points to 475 basis points and required a 25 basis point amendment fee. The required annual amortization also increased from 5.0% per annum to 7.5% per annum. In addition, under the Amended 2014 Loan, we entered into (i) a new $150 million three-year term loan, or the 2015 Term Loan B-1, and (ii) a new $228 million five-year term loan, or the 2015 Term Loan B-2, both of which were funded immediately prior to the Bats Hotspot Acquisition. The 2015 Term Loan B-1 has an

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interest rate based on one-month LIBOR plus a spread of 375 basis points and a 100 basis point original issue discount, or $1.5 million. The 2015 Term Loan B-2 has an interest rate based on one-month LIBOR (with a floor of 100 basis points) plus a spread of 475 basis points and a 100 basis point original issue discount, or $2.3 million. In addition, we entered into a new $100 million revolving credit facility with an interest rate based on one-month LIBOR plus a spread of 350 basis points and an undrawn fee of 50 basis points, replacing the revolving credit facility under the 2014 Loan.

        Affiliates of certain of our principal investors are lenders under our Amended 2014 Loan.

    Bats Hotspot Acquisition

        On March 13, 2015, we completed the acquisition of Bats Hotspot from KCG Holding, Inc. for $365 million in cash at closing and additional contingent consideration payments with an acquisition-date fair value of $62.6 million. We expect to benefit from various synergies as a result of cost savings from consolidation of technology, operations, compensation and occupancy. We also expect to diversify our revenue, while implementing new products and geographies to the Global FX business. We have incurred approximately $7.4 million in acquisition-related costs during the year ended December 31, 2015.

        As of the acquisition dates, Direct Edge's and Bats Hotspot's assets, liabilities and operations, including amortization and depreciation expenses, are reported under our U.S. Equities and Global FX segments, respectively. As a result of these acquisitions, we acquired goodwill and other indefinite-lived intangible assets of approximately $648.9 million that will be assessed for impairment under ASC 350—Intangibles—Goodwill and Other. We also have approximately $231.4 million in identifiable acquired intangible assets, which will result in approximately $22.3 million in amortization expense in 2016. In addition, pursuant to the Bats Hotspot Acquisition agreement, a contingent consideration payment will be payable to the former owner of Bats Hotspot to account for a portion of certain tax benefits realized by us from the Bats Hotspot Acquisition. The payments are contingent on the company generating sufficient taxable income to recognize the tax benefit. We and the former owner have an option to early terminate the contingent consideration arrangement in 2018 for a one-time payment of $50 million from us to the former owner. The fair value of the contingent consideration liability will be reassessed each reporting period, and any change in such liability will be recorded in our results of operations.

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Acquisition Synergies

        In the Chi-X Europe acquisition in 2011, we realized approximately $14 million in annualized synergies through December 31, 2012. With the Direct Edge Acquisition, we realized approximately $28 million in annualized synergies through December 31, 2015, and with the Hotspot Acquisition, we realized approximately $4 million in annualized synergies through December 31, 2015. We expect to realize an additional $19 million and $5 million in annualized synergies through December 31, 2016 from the Direct Edge and Hotspot Acquisitions, respectively. The following summarizes the total synergies realized or expected, as applicable, listed by expense category, for each of our acquisitions for the time periods indicated:

 
  Chi-X Europe   Direct Edge   Hotspot  
 
  Realized
as of
12/31/15
  Realized
as of
12/31/15
  Additional
Expected
through
12/31/16
  Realized
as of
12/31/15
  Additional
Expected
through
12/31/16
 

Compensation and benefits

  $ 9.7   $ 22.1   $ 2.2   $ 4.3   $ 4.9  

Depreciation

    0.1                  

Systems and data communication

    4.1     0.3     7.6          

Occupancy

    0.5     (0.3 )   0.6          

Professional fees

        1.1     (0.7 )        

Regulatory costs

        (1.3 )   0.8          

General and administrative

        6.3     8.0