Citigroup, Morgan Stanley, Credit Suisse First Boston and UBS Securities are each considering buying a stake in struggling options mart Philadelphia Stock Exchange (PHLX), according to a report by the Wall Street Journal.
Citing people familiar with the matter, the latest WSJ report says the four banks have all held discussions with the PHLX, which is struggling to compete against larger competitors such as the New York Stock Exchange and Nasdaq.
Merrill Lynch and Citadel Derivatives acquired ten per cent stakes in PHLX last month for a rumoured $7.5 million apiece. Both firms also have an option to increase their investments in the future. At the time PHLX said the investments are expected to be the first in a series of strategic investments by securities industry firms designed to grow its business.
PHLX went from a member-owned organisation to a private, for-profit company last year but has failed to boost its business and still lags behind the American Stock Exchange, the Chicago Board Options Exchange and the electronic International Securities Exchange in terms of market share. In stocks, PHLX has less than one per cent of the activity listed on the Nyse.
According to the report, PHLX may also be considering an investment in an electronic exchange or ECN in a bid to compete against Nyse, which is merging Archipelago and Nasdaq which is acquiring Instinet.