Trading Newsflashes: U.S. Brokers to Take Stakes in National Stock Exchange, and more

U.S. Brokers to Take Stakes in National Stock Exchange

A group of Wall Street investment banks, including Citigroup, Bear Stearns and Credit Suisse, is reportedly joining forces with the electronic trading arms of Bloomberg and Knight Capital to buy a 50 percent stake in the National Stock Exchange (NSX), according to the Wall Street Journal.

The NSX, formerly known as the Cincinnati Stock Exchange, was the first exchange to convert to an all-electronic model and replace its trading floor with an automated market in 1980.

According to the WSJ story, each firm is expected to take a 10 percent stake in NSX and is apt to pay about $5 million for each stake. However, the terms of the transaction could change before an announcement is made.

This follows several other deals in which banks and brokers purchased minority stakes in regional exchanges in advance of new stock trading rules under Regulation NMS taking effect next year.

In June, Bank of America Securities, Bear Stearns, Goldman Sachs and E*Trade Financial made a combined $20 million equity investment in the Chicago Stock Exchange. A year ago, several firms including Merrill Lynch, Citadel Derivatives and Morgan Stanley each acquired a 10 percent stake in the Philadelphia Stock Exchange, while Citigroup, Credit Suisse and UBS each acquired five percent stakes. Then the Boston Stock Exchange announced an e-trading venture that attracted investments from Fidelity Investments, Credit Suisse, Citigroup and Lehman Brothers.

Nasdaq Raises Market Share in NYSE-Listed Securities up to 10.75 Percent

The Nasdaq Stock Marketincreased its market share in New York Stock Exchange (NYSE)-listed securities to 10.75 percent in July, up from 8.9 percent in June, according to consolidated market performance statistics.

Total market share in NYSE-listed securities is based on total share volume of NYSE-listed securities that are executed on the Nasdaq Market Center, INET and/or Brut books, plus internalized volume as a percentage of total consolidated NYSE market volume.

Nasdaq's total market share in NYSE-listed securities in July was 25.5 percent, which includes NYSE-listed securities executed by broker dealers and reported to Nasdaq.

In advance of Regulation NMS trading rules, which require more automated trading, Nasdaq has aggressively reduced costs, such as offering free routing to the NYSE's DOT system if the order passes through Brut's order book first. The market share gains in NYSE-listed stock could also reflect the acquisition of INET, Instinet's electronic trading arm, which Nasdaq purchased in 2005. Nasdaq is scheduled to complete the integration of INET into a single order book combined with Brut and the Nasdaq Market Center in the third quarter.

Wombat Releases FAST Version of Archipelago Data Feed, Boosting Support for Compression Standard

Wombat Financial Software released a new FAST (FIX Adapted for Streaming) feed handler for the Archipelago Exchange's ARCABook Binary feed.

The move boosts support for the new market data protocol and compression standard designed to streamline market data transmission, said the release.

"FAST has exceeded our expectations and those of our early adoption customer in terms of reducing customer bandwidth costs and increasing data speed," stated Brendan Duffy, VP of engineering at Wombat. In the release, Duffy noted that Wombat is committed to embracing industry standards and to latency and total customer cost reduction. This "means a constant process of seeking out efficiencies across the data delivery chain and reengineering our systems to exploit them," he added in the release. "Adopting FAST is a prime example of that, and we look forward to offering further implementations as more customers demand it and providers deploy it," Duffy stated in the release.

Wombat's Feed Handler for ArcaBook complements Wombat's existing ARCA Binary feed handler and others Wombat provides for data feeds from exchanges, ECNs, alternative trading systems, brokers and consolidated vendor feeds.

According to Rich Shriver, co-chair of the FIX Protocol Limited (FPL) Market Data Optimization Working Group, who is quoted in the release, "The FAST protocol's ability to compress and accelerate data transmission has been receiving a great deal of attention in the capital markets, and we're starting to see real take-up in the financial community."

Belzberg Technologies Explores Sale of the Company's Shares

Toronto's direct-market access trading software and network provider Belzberg Technologies, has formed a special committee of its independent directors to explore strategic alternatives, including the purchase or acquisition of the company's outstanding common shares.

The special committee has hired Putnam Lovell NBF Securities Inc. to provide financial advisory and investment banking services.

"Our board of directors and management is committed to enhancing value for our shareholders," stated Sid Belzberg, president, CEO and chairman of the board of Belzberg Technologies, in the release. "We have built a strong foundation to deliver value to shareholders. Our board of directors believes this is the right time for us to explore our strategic alternatives for enhancing shareholder value and building upon our accomplishments," stated Belzberg in the release.

On Aug. 9, Belzberg's electronic brokerage systems subsidiary entered into an agreement to acquire the business and assets of Nandra Group, an independent direct-access service provider on the floor of the NYSE for $1 million.

Penson Upgrades FX Trading Platform With Auto Dealing

Penson Financial Services Canada upgraded PensonFX, its foreign exchange trading platform used by 20 brokerage firms globally.

With the upgrade, Pension unveiled the concept of auto-dealing to its FX clients, meaning that traders who are connected to PensonFX can act on live tradable prices by securing automatic and instantaneous executions on most deals, the company said.

Auto dealing can increase efficiency by reducing delays and slippage costs.

The new version of PensonFX also comes with strong support for the FIX protocol, as requested by sophisticated financial institutions and trading desks. By using FIX protocol, this allows clients to exchange real-time financial data through a widely accepted set of digital instructions. By adding support for the FIX protocol, Penson is allowing clients to achieve connectivity between their own trading applications and its dealing desk.

PensonFX trading platform is available to Pension clients worldwide and it provides clients with access to competitive tradable prices, real-time streaming charts and news, technical analysis and communication tools.

"Two years after the original launch, the system has grown to serve over 20 brokerage firms with daily trading volume increasing to more than $100 million," stated Rene Aun, financial services manager at Penson Financial Services Canada.