The parent company of the Nasdaq stock exchange said Tuesday that it would buy the electronic bond-trading platform eSpeed for $US750 million, amid consolidation in the industry.
The Nasdaq OMX Group, which is acquiring eSpeed from BGC Partners, a spin-off of Cantor Fitzgerald, is moving to diversity and expand its reach. Like other exchange operators, Nasdaq is dealing with a decline in stock trading activity.
Bonds have traditionally been traded in private, over-the-counter transactions. But many analysts expect that more trading will move onto electronic platforms like eSpeed as a result of recent regulatory changes. Big banks use eSpeed primarily to trade Treasury bonds, the largest and most liquid corner of the bond market.
Nasdaq executives said on Monday that trading activity in the Treasury market should naturally increase once the Federal Reserve begins to step back from its bond-buying programs. More broadly, Nasdaq executives said that eSpeed would allow the company to take advantage of the growing appetite for electronic trading in many types of bonds.
“It provides the framework for us to provide services to customers as the demand for electronic trading increases,” said Eric Noll, an executive vice president at Nasdaq.
The companies are hoping to close the deal later this year.
Sign up for MIS Asia eNewsletters.