Nasdaq to acquire International Securities Exchange for $1.1 billionStaff writer ▼ | March 10, 2016
Nasdaq has agreed to acquire International Securities Exchange (ISE), an operator of three electronic options exchanges, from Deutsche Börse Group.
Acquisition To innovate and experiment
The acquisition allows Nasdaq to improve efficiencies for clients, broaden its technology offering, and provides the capability within the equity options industry to innovate and experiment.
The transaction is expected to be accretive to Nasdaq earnings within 12 months of closing and deliver attractive returns on capital. Nasdaq does not expect a material impact on financial leverage or capital return strategy.
ISE operates three electronic options exchanges: ISE, ISE Gemini and ISE Mercury. ISE’s exchanges serve as the venues for more than 15% of trading in U.S. options. The deal is expected to close in the second half of 2016.
By utilizing its existing options platforms and INET technology, along with ISE’s complementary strengths, Nasdaq will look to build on its robust offerings to provide greater breadth and depth of products and services that will benefit market participants.
Following the close of the transaction, Nasdaq will operate PrecISE Trade, an award-winning front-end order and execution management system for trading options and stock-option combinations. PrecISE lets traders submit, monitor, alter, and cancel orders; display the NBBO and BBO of options on ISE exchanges; and route orders to all options exchanges via execution brokers.
As part of the transaction, Nasdaq will gain an additional 20% stake in The Options Clearing Corporation, for a total of 40% ownership in the world’s largest equity derivatives clearing corporation and one of the largest horizontal clearinghouses.
ISE also operates ETF Ventures, which offers a broad range of capabilities in index development, licensing, financing, and marketing of exchange-traded products; and Longitude, a technology that uses parimutuel principles to aggregate liquidity and produce fair and efficient prices for applications in a diverse range of industries.
Within 18 months of the deal closing, Nasdaq expects the combined organization to realize a minimum of $40 million in annualized expense synergies. Bringing these two options businesses together will result in more competitive pricing to the industry, and enhanced efficiencies to clients.
The transaction is subject to customary closing conditions, including receipt of required regulatory approvals. The deal is currently expected to close in the second half of 2016. ■