Nasdaq rounding out in fixed income with eSpeed

Nasdaq rounding out in fixed income with eSpeed

The Wall Street Journal  02 Jul 2013

Nasdaq OMX Group could use its acquisition of eSpeed, an electronic trading platform for US government debt, for trading in other debt securities, depending on dealer demand, according to an executive.
Nasdaq rounding out in fixed income with eSpeed

The eSpeed platform, which Nasdaq acquired from broker BGC Partners Monday, focuses on trades between banks that have big trading desks buying and selling the newest, most actively traded securities in $500 billion-per-day US Treasury market.

The platform also could cater to less active types of Treasurys and certain corporate bonds, if dealer customers support the idea. New York-based Nasdaq is best known for its stock market, but it also has index and data businesses, derivatives marketplaces and trade processing operations.

While eSpeed currently focuses on on-the-run Treasurys, “it has the embedded functionality to trade many fixed income securities,” said Eric Noll, executive vice president of transaction services at Nasdaq OMX. “The question to ask is when do customers want us to light them up.”

The acquisition strengthens the stock exchange operator’s position in fixed income, where it has already amassed a handful of smaller assets. Among these: an interest-rate futures trading platform Nasdaq runs out of London called NLX, a minority ownership stake in clearinghouse operator LCH.Clearnet Group, and trade processing or “clearing” operations in northern Europe.


The eSpeed deal will generate roughly $100 million in annual revenues, said analysts at Barclays. The company paid $750 million to buy eSpeed and agreed to issue about one million shares over the next 15 years to BGC, bringing the purchase price to $1.2 billion.

Nasdaq in February listed options on US Treasurys on its Nasdaq OMX PHLX platform, and a spokesman said the company is considering listing futures for U.S. Treasurys.

The purchase of eSpeed gives the group a chance to capitalise on increased trading of benchmark Treasurys as central banks scale back their bond-buying programs, leaving Wall Street firms as likely bigger buyers.

This story originally appeared in the Wall Street Journal []


Nasdaq OMX agrees eSpeed acquisition

Nasdaq OMX will also issue around 15 million common shares over 15 years, increasing the total potential value of the deal up to $1.23 billion. The transaction is expected to be accretive to earnings within the first twelve months after closing, excluding deal-related costs.

via Pocket April 02, 2013 at 11:28AM

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