The Chicago Board Options Exchange parent said it would acquire the National Stock Exchange (NSX) in a deal that would expand its relatively small stock-trading operations and allow it to tempt new electronic customers with specialty prices.
CBOE Holdings Inc, which had stayed out of this year's global merger frenzy among exchanges, did not put a price tag on the deal for NSX, an electronic exchange based in New Jersey and owned primarily by large broker dealers.
The deal is expected to close this fall pending regulatory approval, CBOE said Thursday.
CBOE Holdings went public last year and runs the largest U.S. options market. While its CBSX stock exchange matched 0.1 percent of total U.S. equity trading in the past week, NSX had 0.5 percent, according to the website of exchange operator BATS Global Markets.
Despite the very thin market share, NSX should add new customers and allow it to offer a wider range of fees to U.S. equities traders, CBOE said. It would run NSX, formerly the Cincinnati Stock Exchange, as a separate exchange from CBSX, and consolidate data systems and other operations.
Shares of CBOE Holdings were off 1 percent.
Perhaps setting the stage for the deal, CBOE in July moved CBSX's trading operations from Chicago to Secaucus, New Jersey, to draw in more high-frequency electronic traders.
Such high-volume traders are also the target of CBOE's push to offer electronic trading of options tied to the Standard & Poor's 500 Index, to start Oct. 4.
With NSX, CBOE could offer traders of both options and stocks pricing packages whose fees and rebates vary based on what securities, and how often, they trade.
"When you buy another exchange, you can have different venues with different pricing targeting different firms," said Diego Perfumo, an analyst at advisory firm Equity Research Desk. "You create arbitrage opportunities that way."
Earlier this year, Germany's Deutsche Boerse AG agreed to buy NYSE Euronext in a blockbuster $9-billion deal that marked the crest of consolidation plans by bourses in Asia, Australia, Europe and North America.
While many of the plans have since fallen apart, the Deutsche Boerse-NYSE Euronext tie-up would bring three of the U.S. options venues under one roof, putting pressure on CBOE's flagship business.
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