NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today announced the acquisition of 25 percent of the Dutch cash equity and equity derivatives trading venue TOM, The Order Machine. The agreement also includes an option for NASDAQ OMX to acquire an additional 25.1 percent of the remaining shares and secure a majority stake in TOM.
The transaction provides TOM global reach and scale and delivers on NASDAQ OMX’s strategy to expand its derivatives presence across the European market. The current owners will remain shareholders, and as co-owners BinckBanck will provide order flow and Optiver and IMC will provide liquidity in the Dutch market. The fourth co-owner ABN AMRO will also connect to TOM.
“This transaction creates a compelling combination of technology, market expertise, and geographic opportunity,” said Hans-Ole Jochumsen, executive vice president, Global Data Products and Transaction Services Nordics, NASDAQ OMX. “As the only derivatives MTF in Europe with a retail focus, TOM has secured significant market share in single stock options. We intend to leverage their first mover advantage and seize the opportunities created by the regulatory environment in Europe, by expanding investor access to products and markets that improve price discovery and lower trading costs.”
Through the development of the proprietary search engine ‘TOM Smart Execution’, prices in different markets are compared in milliseconds, ensuring that the client’s order is executed at the venue showing the best available price at that moment. Smart Execution has helped TOM secure a market share of approximately 15 percent for single stock options in the Netherlands. The Netherlands is one of the most developed options markets in Europe with a trading volume of 75 million contracts in 2011.
NASDAQ OMX will act as market operator for TOM, and will provide a Genium Inet based trading platform in London, according to an 8 year contract the two firms have signed. The partnership also builds on TOM’s current usage of NASDAQ OMX-powered market technology, specifically, Marketplace for Hire (M4H), which is a multi-market, multi-asset marketplace solution for trading.
“We believe TOM has significant geographic expansion opportunities and now will be able to leverage NASDAQ OMX’s global network and proven track record of market penetration,” said Willem Meijer, CEO of TOM. “Moreover, with their progressive technology and market expertise, we believe NASDAQ OMX and TOM can deliver on the investor demand for access to a variety of derivative products.”
Upon completion of this transaction, NASDAQ OMX will have one seat on the Supervisory Board. TOM will also hire one person from NASDAQ OMX to the Management Board. The acquisition is subject to regulatory approval.
The acquisition will not have a material effect on the results or the financial position of the NASDAQ OMX Group.
