NYSE Euronext Explores Adding Partners To Amex Joint Venture
January 23 2012 - 2:18PM
Dow Jones News
NYSE Euronext (NYX) may add more equity partners to its Amex
stock-options exchange, expanding a strategy that has boosted
trading volume and turned the platform into the Big Board parent's
largest U.S. derivatives market.
Seven banks and trading forms agreed to take a near-50% stake in
NYSE Amex in 2009 in return for a steady flow of trading business
that has almost doubled contract volume on the former American
Stock Exchange, which NYSE acquired a year earlier.
NYSE Amex has held conversations with several more firms
interested in joining the venture, though there are no formal
discussions right now, according to Steve Crutchfield, chief
executive of the exchange.
"We would certainly entertain the possibility of adding new
partners over time," said Crutchfield in an interview on the
sidelines of a Security Traders Association event.
Expanding the consortium ownership group could further lift
business on NYSE Amex, which is the fourth-largest U.S. options
exchange and has outgrown NYSE Arca, its sister market.
The original equity-sharing deal underscored the king-making
power of big firms, which do their own options trading and also
handle the orders of individual investors. This month NYSE Amex's
market share of all U.S. options trading was 13.3%, compared to 7%
when NYSE Euronext bought the exchange, according to data from the
clearinghouse OCC.
Crutchfield declined to identify which firms had expressed
interest in joining the ownership group. The current stakeholders
include Goldman Sachs Group Inc. (GS), Citadel LLC, Bank of America
Corp. (BAC), Citigroup Inc. (C), TD Ameritrade Holding Corp.
(AMTD), UBS AG (UBS, UBSN.VX) and Barclays PLC (BCS, BARC.LN).
Collectively the partners hold about 47.5% of the exchange, with
NYSE Amex owning the remainder. NYSE Euronext or the current equity
owners would have to agree to sell down some of their position to
accommodate a new stakeholder, according to Crutchfield.
He said that potential entrants must be legitimate options
traders -- a stake wouldn't be sold to an asset management firm
interested in holding the position as an investment, for instance
-- and joining the ownership group would entail requirements to
send orders to NYSE Amex.
The exchange has spoken to potential partners as rival markets
look to pursue their own such equity-sharing deals with major
customers.
The BOX Options Exchange, which accounts for about 3.3% of U.S.
options trading, has held talks on a similar deal with a handful of
firms, and a new options market planned by Miami International
Holdings has also been in the hunt for partners, according to
people familiar with the matter. A Miami International official
declined comment.
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117;
jacob.bunge@dowjones.com
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