NYSE Euronext’s signed a deal last month to sell a "significant" equity stake in NYSE Amex Options to seven big brokers. The move is designed to grow electronic trading on the options market that had a 6.4 percent market share last month.
"Electronic trading is a big piece of what we want to build up through this transaction," said Joe Mecane, executive vice president for U.S. markets at NYSE Euronext. "That has not been the historical focus of the Amex platform."
The seven firms that have taken equity stakes are BofA Merrill Lynch, Barclays Capital, Citadel Securities, Citi, Goldman Sachs, TD Ameritrade and UBS. All are big liquidity providers or order-sending firms. NYSE Euronext will maintain the largest stake in the exchange and will run the exchange’s day-to-day affairs. NYSE Euronext declined to provide specifics on the deal that is expected to close by the end of the year.
"This gives us the ability to partner with a number of significant liquidity providers as we build out the Amex platform," Mecane said. "From their standpoint, this gives them a vested interest and some control over market structure as we continue to evolve in the marketplace. Our incentives are aligned."
Citadel, the largest equity options market maker in the U.S., agrees. "Picking the right partners is really helpful–and in many cases critical–in the initial phase of growing liquidity on a platform," said Marty Mannion, chief operating officer of Citadel Execution Services.
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