A group of Wall Street investment banks, including Citigroup, Bear Stearns and Credit Suisse, reportedly is joining forces with the electronic trading arms of Bloomberg and Knight Capital to buy a 50 percent stake in the National Stock Exchange (NSX). According to published reports, each firm is expected to take a 10 percent stake in NSX for about $5 million each. However, the terms of the transaction could change before a final announcement is made.
The NSX, formerly known as the Cincinnati Stock Exchange, was the first exchange to convert to an all-electronic model and replace its trading floor with an automated market in 1980.
The latest news follows several other deals in which banks and brokers purchased minority stakes in regional exchanges in advance of new stock trading rules under Regulation NMS that take effect next year.
In June, Bank of America Securities, Bear Stearns, Goldman Sachs and E*Trade Financial made a combined $20 million equity investment in the Chicago Stock Exchange. A year ago, several firms - including Merrill Lynch, Citadel Derivatives and Morgan Stanley - each acquired a 10 percent stake in the Philadelphia Stock Exchange, while Citigroup, Credit Suisse and UBS each acquired 5 percent stakes. The Boston Stock Exchange also announced an e-trading venture that attracted investments from Fidelity Investments, Credit Suisse, Citigroup and Lehman Brothers.