Citadel Derivatives is to purchase a minority equity interest in Knight Capital's Direct Edge ECN. Financial terms of the transaction have not been disclosed.
Knight Capital bought the ECN in May 2005, when it was called Attain. The electronic trading network was re-launched as the Direct Edge ECN in October 2005.
Both Knight and Citadel have received regulatory approval for the investment, which is expected to close by 31 July 2007.
The two parties say they intend to seek out other strategic investors who, in addition to providing an equity investment, also seek to utilise Direct Edge ECN for trade execution.
Knight has also recruited Nasdaq's William O'Brien as chief executive officer of Direct Edge ECN.
O'Brien was most recently senior vice president, new listings at Nasdaq. He joined the electronic stock market in 2004 following Nasdaq's acquisition of Brut, where he had been chief operating officer since 2002.
Current CEO of Direct Edge William Karsh will remain with the company under O'Brien when the transaction is closed.