PHLX investors increase stake to 89.4%

The Philadelphia Stock Exchange (PHLX) says that six investment banks that invested in its business last year now hold an 89.4% stake in the company after they exercised warrants allowing them to buy additional shares.

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PHLX investors increase stake to 89.4%

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Merrill Lynch and Citadel Derivatives each acquired a ten per cent stake in the options mart in June last year for a rumoured $7.5 million apiece. Both firms had an option to increase their investments in PHLX.

In August Morgan Stanley acquired a ten per cent stake in the Philadelphia exchange for $7.5 million, while Citigroup, Credit Suisse First Boston and UBS each invested $3.75 million for five per cent stakes. Again, all the banks involved had the option to obtain more shares.

The six investors now hold 89.4% of the total outstanding shares of PHLX.

The news follows reports last month that Bank of America, Bear Stearns, E*Trade Financial and Goldman Sachs are making a combined $20 million equity investment in the Chicago Stock Exchange (CHX).

CHX said earlier this year that it was in talks with a number of banks about selling a minority stake of the business.

The Chicago exchange is using the funds to improve its electronic trading systems.

The investments come as regional US exchanges struggle to compete against larger competitors including New York Stock Exchange and Nasdaq, and amid rising concern that the big exchanges in the US could use their market power to raise trading fees.

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