Direct Edge, a US electronic communications network (ECN), has completed its acquisition of the ISE Stock Exchange, a US equity exchange operated by the International Securities Exchange (ISE).
Direct Edge plans to use the purchase to gain national securities exchange status for EDGA and EDGX, its two ECN trading platforms. Once this process has been completed, the ISE will provide the data centre and regulatory services for Direct Edge exchange subsidiaries.
Until the Securities and Exchange Commission, the US regulatory body, approves these licenses, Direct Edge will use the ISE Stock Exchange for quotation display and trade-through protection in the US National Market System.
“In addition to facilitating our transition to exchange status, Direct Edge has gained immediate direct access to the National Market System, inherited innovative products and improved its technology and infrastructure,” said Direct Edge CEO William O’Brien.
The transaction means the ISE Stock Exchange will become a wholly-owned subsidiary of Direct Edge Holdings, while the ISE will gain a 31.54% equity stake in Direct Edge.
Knight Capital Group – which previously held a 38% stake – Citadel Derivatives Group and Goldman Sachs each retain a 19.9% ownership interest in Direct Edge, while J.P. Morgan has increased its stake in the firm. The remaining ownership is held by Deutsche Bank, Merrill Lynch, Nomura Securities and Sun Trading.