Nasdaq to Acquire ISE

On Wednesday, it was announced that  US-based options exchange ISE (International Securities Exchange) will soon change hands to Nasdaq from its current parent company, Deutsche Boerse AG, which made the announcement. The sale price of the exchange operator has been set at $1.1 billion (USD).

Nasdaq

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ISE was acquired by the German securities organizer in 2007 and has lost much of its value since. It’s original sale price was more than double the amount for which it will be sold to Nasdaq, coming in at $2.8 billion prior to the financial collapse of 2008. ISE, which was only founded in 2000, was acquired by Deutsche Boerse in order to give it a presence in the United States, as well as in Europe. Following the 2007 acquisition, ISE continued to operate as an SEC regulated stock options exchange.

 

Now, Deutsche Boerse is looking to a merger with the London Stock Exchange to diversify its European business. The merger deal with LSE has yet to be finalized or approved by the relevant regulatory bodies. However, some analysts have suggested that the liquidation of ISE, which is expected to bring in somewhat under 1 billion in additional liquid cash assets, might be a move designed to more easily facilitate the merger and to give Deustsche Boerse a stronger position from which to negotiate with its British counterpart in the deal. American exchange operator Intercontinental Exchange has also expressed interest in merging with the London Stock Exchange, creating potential competition for Deutsche Boerse should Intercontinental decide to present a merging offer.

 

Nasdaq Chief Executive Robert Greifeld stated during interviews regarding the acquisition that ISE was an asset he had been interested in procuring for a period of several years. In order to incorporate ISE’s existing market share into its own business, Nasdaq is expected to host the ISE exchange on its own electronic trading platforms, thus saving on the operational costs of administering two separate exchange platforms. Though Nasdaq has long been the largest exchange by market share and volume in the United States, the acquisition of ISE is projected to push its total market share over 40 percent after the acquisition has been completed.

 

Sources:

http://www.reuters.com/article/us-international-securities-exchange-m-a-idUSKCN0WB2UM

http://www.crainsnewyork.com/article/20160310/FINANCE/160319988/with-latest-deal-nasdaq-moves-closer-to-challenging-flash-boys-exchange

 

 

 


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