Chicago Stock Exchange Finds Partners

A group of banks pays $20 million for a minority stake.

Author:: Lauren Rae Silva
Publish date:: Jun 21, 2006 1:58 PM EDT

A group of banks pays $20 million for a minority stake.

The Chicago Stock Exchange has found some Wall Street partners.

CHX Holdings, the parent company of the Chicago Stock Exchange, said Wednesday that

Bank of America

(BAC) - Get Report

Bear Stearns

( BSC),

E*Trade

(ET) - Get Report

and

Goldman Sachs

(GS) - Get Report

invested $20 million to obtain a minority stake in the exchange.

The release did not give the size of the stake. A spokesman said the final terms of the deal are scheduled to be sent out to CHX shareholders in no more than two weeks.

"This transaction represents an endorsement of the exchange's strategic plan to leverage existing volume and connectivity and to integrate a state-of-the-art electronic trade-matching engine in order to attract significant new business," Valerie Jarrett, CHX chairman, said in the release. "We welcome these key industry leaders as shareholders, and we are confident that they will play a vital role in increasing shareholder value, while we continue to serve the investing public."

CSX management also said the brokers' interest will help it enhance its electronic-trading capabilities.

"We believe that this is an ideal blend of investors with ability to bring together retail, institutional and professional trading activity," CHX CEO Dave Herron said. "Throughout the negotiations with each investor, we have developed a shared vision of the markets and the significant role that the CHX will play in the highly automated U.S. equity trading environment."

Last August, a handful Wall Street firms took a large stake in the Philadelphia Stock Exchange, which trades options and stocks.

Morgan Stanley

(MS) - Get Report

acquired a 10% stake in the exchange for $7.5 million, while

UBS

(UBS) - Get Report

Credit Suisse

( CSR) and

Citigroup

each bought a 5% equity stake for $3.75 million.