(MENAFN - AFP) Electronic exchange operators BATS Global Markets and Direct Edge Holdings announced Monday they would merge to create the second-largest stock exchange in the United States.
The agreement would unite two companies originally created by banks and trading firms to compete with the major US exchanges.
BATS and Direct Edge accounted for 20.6 percent of shares traded in the US so far this month.
The merger will keep the four US equity exchanges run by BATS and Direct Edge in operation: the BATS BZX and BYX Exchanges and the Direct Edge EDGX and EDGA exchanges.
The four currently carry about one-fifth of the volume of equity trade on all US exchanges , and when completed, the merged company would be second to the New York Stock Exchange, owned by NYSE Euronext.
The transaction is expected to be completed in the first half of 2014, subject to regulatory approvals, BATS and Direct Edge said in a statement.
The terms of the deal were not disclosed.
"This agreement is an important milestone for the US equities market and other markets around the globe as it will combine two organizations that have been innovative in creating a more competitive marketplace to benefit all investors," Joe Ratterman, BATS chief executive, said in the statement.
Ratterman will keep the CEO role in the combined company operating under BATS Global Markets, while Direct Edge CEO William O'Brien will be president.
The new entity exclusively will use the proprietary BATS technology and will be headquartered near Kansas City, Missouri, where BATS currently operates from.
It will have additional offices in New York and London, and in Jersey City, New Jersey, where Direct Edge is based.
BATS also operates a US equity options market and BATS Chi-X Europe, the largest pan-European equities exchange by market share and value traded.