Nasdaq took its first leap into the derivatives business on Wednesday with its $652 million all-cash acquisition of the Philadelphia Stock Exchange, the third-biggest options exchange and the oldest in the nation.
The deal, which is expected to close in the first quarter and begin to contribute to Nasdaq’s earnings in 2009, includes the exchange’s futures market subsidiary, the Philadelphia Board of Trade, and its Stock Clearing Corporation of Philadelphia.
A key asset in the transaction is PHLX’s proprietary trading platform based on a market maker model. Nasdaq said it will still launch a separate, electronic options trading system in December based on a price/time order book model.
“This strategic combination achieves our goal of diversifying our product and service offerings with attractive benefits to our trading clients while generating strong financial returns,” said Nasdaq President and Chief Executive Officer Bob Greifeld. “Nasdaq has extensive experience in integrating technologies and businesses, and we will be able to seamlessly integrate PHLX with the Nasdaq Stock Market.”
The options marketplace has grown by more than 30% annually since 2003. The Philadelphia Stock Exchange commands a 15% share of that market.