US market operator Nasdaq is acquiring the Philadelphia Stock Exchange (PHLX) for $652 million cash in a move that will see it expand into the fast-growing options trading business.
The Philadelphia exchange, which is the third-largest options exchange in the US, is majority-owned by a group of brokerage firms. The six Wall Street firms - Merrill Lynch, Citadel Derivatives Morgan Stanley, Citigroup, Credit Suisse and UBS - hold a collective 89.4% stake in PHLX.
Nasdaq says the acquisition of PHLX brings an organisation with a strong track record of building market share in the very competitive options marketplace, which has grown by more than 30% annually since 2003. With PHLX Nasdaq will handle about 15% of US options trades.
The New York-based exchange plans to preserve PHLX's market structure and will continue to operate the electronic options trading platform alongside the options trading floor in Philadelphia.
Nasdaq says it will also continue to plans to launch its own electronic price/time options trading system in December.
"Philadelphia has successfully offered floor and electronic trading for some time. We think this capability will continue to be the best approach to serving options traders as the options market continues to evolve," says Chris Concannon, Nasdaq EVP of transaction services. "In addition to firmly establishing Nasdaq's presence in the options market, this acquisition also enhances our organic growth strategy, which will come to fruition next month when we launch our price/time priority options platform."
Nasdaq says it expects the takeover to boost earnings starting in 2009. The deal is expected to be completed in the first quarter of 2008.