"NASDAQ OMX is committed to offering our customers direct access to differentiated financial services platforms from an independent provider," said Eric Noll, Executive Vice President, Transaction Services U.S. and U.K., NASDAQ OMX. "U.S. Treasuries represent a significant opportunity to expand NASDAQ OMX's trading business into a sizable new asset class that will provide our customers with access to a variety of instruments to better meet their trading strategies."
Market Expansion and Diversification
NASDAQ OMX expects U.S. Treasury volumes – already one of the largest markets in the world with over $500 billion in daily trading volume – to increase, as core drivers gain momentum and economic headwinds subside. Positive market trends such as the stability in the issuance of new Treasuries, the continued electronification of the U.S. Treasury market and the resolution of fiscal uncertainty will drive volume growth. In addition, government intervention through quantitative easing and other market operations has artificially depressed the natural volatility in the U.S. Treasury market. eSpeed is well positioned, through the independent ownership of NASDAQ OMX, to benefit from the normalization of the U.S. government bond market and the cyclical drivers of volumes.
At the same time, the acquisition diversifies NASDAQ OMX Transaction Services and allows the Company to maximize new opportunities in the trading of fixed income securities around the globe. NASDAQ OMX expects to utilize the acquisition of eSpeed to trade additional fixed income products, offering customers increased access to a greater variety of trading instruments.
Proposed Acquisition Details
Under the terms of the acquisition, NASDAQ OMX has entered into an agreement to acquire the eSpeed benchmark, on-the-run platform from BGC Partners, Inc. for a purchase price of $750 million in cash plus certain contingent issuances of NASDAQ OMX stock over 15 years that approximate certain tax benefits to NASDAQ OMX associated with the transaction. Based on the current stock price, NASDAQ OMX expects to issue approximately one million shares annually over 15 years. Committed bridge financing is in place and the Company expects to fund the cash purchase price with cash on hand and in the long-term debt markets.