Bats Trading filed an application with the SEC to become a fully licensed securities exchange last November. At the time Bats CEO Joe Ratterman said the motivation to become an exchange stemmed from the desire to participate directly in the national market system and to be on the "same regulatory playing field" as primary competitors.

Last month the Missouri-based ECN operator hired Eric Swanson - who served at the SEC from 1996-2006 - as general counsel with a primary brief to work on gaining approval for its exchange application.

The chances of Bats becoming a registered exchange have now been given a further boost after the SEC said this week that the ECN's application would be published for public comment.

The move suggests that the extensive discussions between the regulator and Bats' management met with the SEC's approval.

However, this provides no guarantee that Bats will be granted exchange status any time soon. In the past other companies have found it very difficult to acquire exchange status, including Nasdaq which had to wait five years after filing an application before it was granted exchange status by the regulator.

The Bats ECN, which is designed to handle high-speed, high-volume and anonymous algorithmic trading for broker-dealers, launched two years ago and now claims a 8-10% market share in US equities. An aggressive one moth pricing plan in January 2007 has helped drive trade volumes and forced both Nasdaq and Nyse to adjust their fees.

On 23 Janaury 2008 the Bats ECN crossed the one billion volume mark for the first time, finishing the day with more than 1.18 billion shares. Bats said it on the day it touched roughly 11.3% of all Nasdaq-listed volume, 10.4% of Amex-listed volume and 8.0% of Nyse-listed shares.

Last month JPMorgan and Deutsche Bank became the latest in a number of Wall Street banks to invest in the ECN operator. Merrill Lynch, Morgan Stanley, Credit Suisse, Lehman Brothers and Citi and also taken stakes in the company.