Nasdaq is at present involved in talks to acquire the Philadelphia Stock Exchange, the third-largest options exchange in the US by contracts traded, reported the Wall Street Journal recently. Though the two exchanges have been locked in acquisition negotiation for months, but reaching on an agreement is not expected anytime soon and the report suggests it might take several weeks to conclude the deal. This takeover move by Nasdaq has been strategically taken to break into the options-trading business.

The negotiations between the two markets have gathered momentum in recent weeks as Nasdaq eyeing on its next step after a failed effort to acquire London Stock Exchange PLC.

The recent takeover move for acquiring the country’s third-largest options exchange by contracts traded would provide the Nasdaq a sizable foothold in the options business, which is the Philadelphia exchange’s strongest point. Exchanges like Nasdaq are increasingly stepping up into the business, in which investors trade the right, but not the obligation, to buy or sell a security in the future.

The takeover effort was well anticipated in the market as, Nasdaq chief executive Robert Greifeld had earlier pronounced plans September last year to launch an options business by 2007. At present there are six options exchanges operational in the U.S. In its earlier bid to expand business by acquiring LSE was thwarted out by LSE shareholders.

The Philadelphia exchange trades more than 7,000 stocks, 2,400 equity options, 17 index options and multiple currency pairs, like the euro against the U.S. dollar. Experts have valued the exchange roughly between $250 million to $300 million and they have expressed that the amount is si9gnificantly small that the Nsdaq could comfortably absorb. Nasdaq is the second largest US stock market by the value of its listed companies.

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Posted by: Balendu    Source

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