London’s FTSE 100 faces rival index from Kansas

Bloomberg

The 32-year-old FTSE 100 Index, synonymous with the U.K. stock market, is about to get some competition.
The benchmark’s four-letter moniker is local shorthand for laypeople and professionals to describe the daily gyrations of the nation’s $3.3 trillion equity market. Now, Lenexa, Kansas-based rival Bats Global Markets Inc. is now trying to muscle in on the FTSE 100’s name recognition — and fees — by debuting a new index, available in real time, free of charge, to media companies and retail
investors.
On Monday, London Tube commuters browsing stock information in local newspapers may see the BUK100 alongside, or even instead of, the venerable London Stock Exchange Group Plc’s FTSE 100.
The Bats gauge will be among its 18 indexes of U.K. securities, using the pan-European exchange’s own data. Bats, the second-biggest U.S. public exchange operator, could eventually introduce indexes in other areas. “We had a number of customers, and non-customers actually, come to us who were getting very frustrated with the pricing that they were starting to see around indexes,” Mark Hemsley, CEO of Bats Europe, said.

Big Business
Index data, through licensing and services, has become big business for exchange companies. LSE’s division, which includes FTSE and the Russell small-cap indexes, raked in 517.4 million pounds in revenue last year. LSE says some $381 billion of exchange-traded funds are linked to its indexes. The LSE’s stable of stock indexes was cited as a strategic reason for its proposed merger with Deutsche Boerse AG, which operates the DAX and STOXX brands. Professional traders will have to pay to use the BUK100, as will investment firms that use them to create products such as structured notes. The fees may be between anywhere from 25% to 10 times cheaper than the incumbent charges, Hemsley said.