UPDATE 1-BATS files to launch US options mart in early 2010

NEW YORK, Nov 13 (Reuters) - BATS Global Markets, an aggressive U.S.-based market operator, filed with regulators to launch its equity options exchange early next year, and said it intends to play a big role in the regulatory debate that hangs over the marketplace.

The exchange, called BATS Options, will have 'simple, transparent pricing,' BATS said in the Friday filing.

It would be the eighth equity options venue in a crowded field dominated by the Chicago Board Options Exchange and the International Securities Exchange.

BATS is owned by some of the biggest banks and market players, including JPMorgan Chase & Co and Citigroup Inc. BATS Options plans to use the so-called maker-taker pricing model that provides rebates to those who add liquidity and charges fees to those who remove liquidity.

The maker-taker model is used by U.S. stock markets, attracting the fastest market makers, known as high-frequency traders, and the volumes they provide.

The largest of the seven existing U.S. options markets use a traditional 'payment for order flow' pricing model, where markets pay brokers for routing orders to them. The CBOE plans to launch a new venue in 2010.

BATS Chief Executive Joe Ratterman said in a statement the company 'intends to be a clear and loud voice ... on topics like penny pricing, payment for order flow and step-up options.'

High-frequency traders, which use algorithms to shave tiny profits from market imbalances, favor the narrower spreads that come from quoting equity options in penny increments. Some equity options have been priced in pennies, rather than larger increments, for nearly three years. That program was recently expanded.

The U.S. Securities and Exchange Commission has proposed to ban step-up options, also known as 'flashes,' in which some exchanges show orders to specific market participants before routing them to the wider market.

The ban is seen as very likely in equities markets but could face strong resistance in the options realm.

Ratterman told Reuters in May that BATS -- which also runs a U.S. stock market and a European alternative platform -- planned to trade options.

(Reporting by Jonathan Spicer; editing by John Wallace) Keywords: BATS/OPTIONS ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.