The newly merged Nasdaq OMX Group is acquiring a 20% equity stake in Agora-X - a new US marketplace for over-the-counter (OTC) commodity contracts - for $7.5 million.
Agora-X, which is set to launch in mid-2008 - is currently a subsidiary of commodity risk management firm FCStone, which provided seed funding for the ECN.
FCStone, Agora-X and Nasdaq OMX have signed definitive agreements for the exchange to acquire a 20% equity interest in the new ECN if the full $7.5 million is committed, pending fulfillment of closing conditions and milestones.
The Agora-X marketplace is designed for a wide range of contract types, although it will initially target OTC option "look-a-likes" in specific energy and agricultural commodities, as well as all commodity swaps. The Agora-X matching engine is designed to provide rapid, low-cost OTC order fulfillment and clearing, including capability for algorithmic trades.
Commenting on the investment, Chris Concannon, EVP, Nasdaq OMX, says: "Partnering to develop Agora-X fits with Nasdaq OMX's strategy to bring efficiencies and cost savings to the broader trading arena."
"With Agora-X, OTC commodity traders can benefit from the same efficiency, cost savings, transparency and liquidity that Nasdaq OMX has brought to the equity markets," he adds.
The Nasdaq OMX investment will be used for development, general business purposes and to repay some of the advances made to Agora-X by FCStone.
Earlier this year OMX won a deal to provide Agora-X with a hosted trading system, including hardware, software and operations support for the ECN. The deal covers licensing, implementation and customisation as well as hosting, monitoring, maintenance and on-going support of the platform.