Direct Edge ECN is partnering with the ISE Stock Exchange under a definitive agreement signed by both of their parent companies, Direct Edge Holdings and the International Securities Exchange. ISE Stock Exchange will become a wholly owned subsidiary of Direct Edge. In return, ISE will gain an ownership stake in Direct Edge, joining Knight Capital Group, Goldman Sachs and Citadel as strategic investors. The transaction is expected to close in the fourth quarter of 2008, pending regulatory approvals.
The move is part of a strategy to advance Direct Edge's transition to exchange status, according to Friday's announcement. Through the partnership, Direct Edge will have access to the National Market System, strengthen its technology and infrastructure, and position itself to meet the regulatory requirements necessary to become an exchange.
"We re very excited to announce this partnership with the ISE, which will strengthen our competitive position by accelerating the evolution of Direct Edge as a major market center on several fronts," stated William O'Brien, CEO of Direct Edge in the announcement. "By leveraging ISE's technology and regulatory expertise and continuing to offer the innovative market structure and order types that have facilitated our significant recent growth, we will be poised to expand upon our established liquidity base and to provide our customers with an industry-leading exchange platform," further stated O'Brien.
When the transaction is completed the strategic investors of both Direct Edge and the ISE Stock Exchange will have a combined 68.5 percent ownership interest in Direct Edge Holdings with Knight Capital Group, Inc.., Citadel Derivatives Group and Goldman Sachs, each retaining a 19.9 percent ownership interest. ISE 's investment in Direct Edge will total approximately $123 million, which includes an increase in ISE's investment in the ISE Stock Exchange. The amount of that increase was not disclosed.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio