Nasdaq has agreed to buy electronic trading platform eSpeed from interbroker dealer BGC Partners for $750 million (£492m), as the stock exchange group seeks to further diversify from its core trading business.
The acquisition of the electronic trading platform, used to automatically execute orders for US Treasury bonds, will enable Nasdaq to enter into the lucrative electronic fixed income business.
Nasdaq is intent on diversifying its business as it reacts to falling stock trading volumes. According to the Financial Times, the stock exchange group’s foray into the fixed income market is likely to be driven by high speed traders moving into new markets such as the trading of bonds.
"We are building a diverse, customer-centric portfolio of corporate, trading, technology and information solutions," said Nasdaq CEO Bob Greifeld. "We view the eSpeed platform as a compelling extension of NASDAQ OMX's strategic direction as eSpeed is a major player in the U.S. Treasury market, has derivative-industry margins, 70 percent of its revenue is derived from fixed contracts and it has a long-standing presence on trading desks around the world.”
BCG said in a statement that the eSpeed platform, along with the related market data and its co-location business being acquired by Nasdaq, generated just less than $100 million revenues last year.
The deal, which could rise to over $1billion with the addition of Nasdaq stock, will also see Nasdaq take over BGC’s New Jersey data centre, and a number of staff.
In a separate news, Nasdaq said last week that it will launch a joint wireless network alongside CME Group. Instead of fibre optic links, increasingly used to enable speedy Transatlantic communications for example, stock and derivative prices will be transmitted between the two firms’ Chicago and NJ data centres even faster using microwave transmissions.
According to the Wall Street Journal, the CME and Nasdaq microwave link will allow data to be transmitted to one data centre and back within 8.5 milliseconds.