Nasdaq OMX seeks derivatives growth with TOM

Venue operator Nasdaq OMX has signalled further European expansion with the first step toward acquiring a Dutch derivatives trading venue.

Exchange group Nasdaq OMX has laid out plans for further expansion in Europe, with the acquisition of a stake in retail-focused derivatives trading venue.

Nasdaq OMX bought a 25% stake in Amsterdam-based cash equity and equity derivatives multilateral trading facility (MTF) TOM, or The Order Machine, with the option to purchase another 25.1% to gain control of the company. 

At the heart of TOM is order routing technology that sends orders to other venues to obtain best execution which Hans-Ole Jochumsen, executive vice president, global data products and transaction services, Nordics for Nasdaq OMX, said would be the catalyst for growing TOM's market share from 15% of the Dutch derivatives market to 30-40%.

“The next wave of competition in European securities will be in the derivatives space and our ambition for TOM is create a pan-European equity derivative exchange platform,” Jochumsen said. “We want to be in the forefront of a development we see coming and often its best to be the first to move. TOM’s order router and strong order flow providers and market markers will put it in a good position to grow further."

TOM launched only ten months ago and was initially founded in 2009 by BinckBank and European derivatives market maker Optiver as a joint venture before ABN AMRO Clearing Bank purchased a stake in 2010, followed by prop trading firm IMC Financial Markets this year.

The current owners will remain shareholders, while BinckBank and Optiver will both provide order flow to TOM. ABN AMRO will also connect to the venue.

The expected acquisition will boost Nasdaq OMX’s growth plans in Europe, which include the launch of another European derivatives venue, NLX, scheduled for Q1 next year.

NLX will initially offer trading in euro- and sterling-denominated short- and long-term interest rate derivatives and will use technology provider SunGard’s Stream Derivatives suite of solutions.

Nasdaq OMX also launched a Nordic bonds MTF this week to expand their Copenhagen and Stockholm equities venues under the First North brand.

The First North Bond market will target small- and medium-sized companies in the Nordic region by letting firms list without meeting IFRS accounting standards required by other venues.