Chicago-based Getco is expanding its market making operations with an acquisition of Bank of America Merrill Lynch’s designated market maker business for the New York Stock Exchange.
The acquisition will more than double Getco’s designated market making services at the NYSE, making it the DMM for approximately 650 companies and a total of 850 securities. Terms of the deal were not disclosed.
“We’ve largely been focused on the electronic platforms, but what’s happened over the last several years is the New York Stock Exchange has really modernized itself, and we’re now able to take the technology that we’ve used on the pure electronic markets and bring it to the New York Stock Exchange,” said Dave Babulak, Getco’s head of strategic initiatives.
Though Getco was not a DMM for NYSE until the beginning of 2010, it has participated in a number of big names, including serving as DMM for General Motors’ $20.1 billion initial public offering at the end of 2010.
Babulak said being a DMM has been a good business for Getco because it allows the firm to get to know companies better and understand them from the issuer’s perspective. Numerically, however, he said the DMM operation is still a fairly small piece of Getco’s overall business.
The deal is expected to close in mid-December. Once it goes through, Getco plans to take on most of the 20 to 30 staff members BofA Merrill currently has working on its DMM unit.
Lawrence Leibowitz, chief operating officer and head of global cash markets for NYSE Euronext, said in a statement that Getco has demonstrated strong performance as a DMM and has an exceptional track record.
After the acquisition closes, Getco will be the second-largest DMM on the NYSE after Barclays. Both Knight Capital and Goldman Sachs also have DMM units at the exchange.
