German exchange group Deutsche Börse plans to expand its retail presence with the purchase of a majority stake in Tradegate Exchange, operator of TRADEGATE, an off-exchange trading platform aimed at private investors.
Deutsche Börse will acquire a 75% holding plus one share in the company with effect from 8 January 2010. From the start of next year, TRADEGATE will change its status from a multilateral trading facility (MTF) to a regulated market under MiFID, and will be renamed Tradegate Exchange.
Deutsche Börse say its majority interest in Tradegate Exchange will help expand its trading offering for private investors and strengthen its position in the European retail market.
It plans to offer online brokers executing on Tradegate Exchange new trading functions, longer trading hours and innovative order types at attractive prices.
“The transition of the successful MTF TRADEGATE into a regulated trading venue as Tradegate Exchange is an opportunity for Deutsche Börse to employ its core competency and to operate an additional stock exchange in Germany. Our common objective is to expand retail business across Europe,” said Frank Gerstenschläger, member of Deutsche Börse’s executive board with responsibility for the Xetra business area. Xetra is Deutsche Börse’s electronic equities order book and trading system.
Tradegate Exchange has been operating since 2001 and allows private investors to trade equities, bonds and funds. Its members are predominantly online banks in Germany, France and Austria.
As part of the deal, Deutsche Börse will also buy a 5% in Tradegate AG Wertpapierhandelsbank, one of the market makers on Tradegate Exchange, with an option to increase its stake to a maximum of 20%.
The German exchange will pay a single-figure million euro sum for its stakes in Tradegate Exchange and Tradegate AG.
“The market share of the MTF TRADEGATE has grown continuously and significantly in recent years. This shows that our strategy to develop a trading platform in tune with the needs of private investors has borne fruit,” said Holger Timm, CEO of Tradegate AG. “We are pursuing further growth of the platform into the rest of Europe with Deutsche Börse’s renown and strength in terms of distribution.”
The purchase of the Tradegate stake is the latest in a line of expansion initiatives by Deutsche Börse. The exchange announced plans to buy algorithmic news firm Need To Know News on 20 November and is in the process of launching Xetra International Market, a pan-European trading service for blue-chip equities. It is also in negotiations with the Warsaw Stock Exchange concerning a potential takeover.