CBOE Stock Exchange, known as CBSX, has entered into a definitive agreement to acquire the National Stock Exchange (NSX), the all-electronic stock exchange, which is owned by several nationally-known broker-dealers.
The acquisition will allow CBSX to expand its footprint in the securities exchange space by wholly owning and operating a second exchange, according to a press statement.
This is a win for the NSX too, which has suffered missteps with its technology implementations over the years. Perhaps its new owners at the CBSX can put the ailing exchange on a better IT footing, observers note. For example, initial plans call for CBSX to operate NSX as a separate exchange, while consolidating data systems and business operations.
The NSX acquisition, which has been approved by CBSX and NSX boards of directors, is subject to SEC approval and is expected to be finalized this fall.
"The acquisition of NSX is an important milestone, marking a new phase of growth at CBSX," says CBSX CEO David Harris. "Economies of scale should enable us to efficiently operate a second exchange and to grow our customer base by providing additional pricing models to the U.S. equities marketplace."
"With the changing landscape of the securities marketplace and after careful consideration, NSX felt it was in the best interests of its customers to pursue an acquisition by a market structure innovator such as CBSX," says Joseph S. Rizzello, NSX CEO. "We are confident that the acquisition by CBSX will be a seamless transition and will enable NSX to continue to showcase its strong infrastructure without any interruption to the outstanding service and technology expected by NSX's customer base."
CBOE Holdings holds 49% of CBSX, making it the biggest owner. Other owners include brokerages Cowen Goup, Interactive Brokers Group, LaBranche & Co. and Susquehanna LLC.
"As the creator and the largest owner of CBSX, CBOE supports CBSX's effort to acquire another exchange 'medallion' in this highly competitive securities arena," CBOE Chairman and CEO William J. Brodsky says. "In the last few months, CBSX has completed some major initiatives, including this key acquisition, to expand its growth potential."
In July, CBSX relocated its trading operations to the East Coast from Chicago and began trading from the Equinix NY4 IBX datacenter in Secaucus, NJ. The move was aimed at increasing execution speed for the majority of CBSX's customers, which are located on the East Coast. Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio