Deutsche Boerse sells US options exchange to Nasdaq

The ISE's market share had fallen from 28% in 2007 to 14% last month.

Deutsche Boerse will sell its US equity options exchange group, the International Securities Exchange (ISE), to Nasdaq for $1.1 billion.

The sale will include ISE’s three US equity options platforms, as well as ISE’s holding company US Exchange Holdings.

ISE was bought by Eurex, Deutsche Boerse’s derivatives business, in December 2007 for $2.8 billion. At the time, the ISE held 28.1% of the US equity options market share, second to the Chicago Board Options Exchange (CBOE).

However, with the proliferation of options exchanges in the US, ISE’s three exchanges held 15% of total options volume, according to Options Clearing Corporation (OCC) data.

Carsten Kengeter, CEO of Deutsche Bourse said: “We are pursuing the goal to become the number one or two player in every business in which we operate… In areas where we are not able to meet this goal, we are evaluating other options. ISE…has excellent prospects to develop under the ownership of an US exchange.”

Meanwhile the acquisition will significantly boost Nasdaq’s position in the US options market, as it looks to combine the ISE with its three other options exchanges. In addition, the acquisition of ISE will double Nasdaq’s stake in the OCC, the US options clearing house which is collectively owned by the exchanges, to 40%.

Gary Katz, president and CEO of ISE added: “As we work to ensure a smooth transition to our new owners, we see the value in combining our complementary strengths with Nasdaq, whose brand is synonymous with exchange and technology leadership, and we are committed to delivering on the value proposition that they recognized in ISE.”

The completion of the transaction is subject to the approval by competition and supervisory authorities and is anticipated for the second half of 2016.