--Deal shifts calculation, distribution of index values to
NYSE
--Alliance underscores importance of stock indexes to
exchanges
--Russell tie-up comes as NYSE Technologies unit has struggled
to grow
(Adds details on agreement, background throughout.)
By Jacob Bunge and Ben Fox Rubin
Russell Investments and NYSE Euronext (NYX) signed a deal
Tuesday that will see the exchange company take over broadcasting
of Russell stock-index data, while exploring other joint
ventures.
The deal will shift the systems calculating valuations for the
Russell 2000 index of small-cap stocks to the Big Board parent's
New Jersey data center. It also includes a commitment to developing
new options contracts around the Russell indexes, according to a
statement from the companies.
The agreement underscores the growing importance of stock
indexes to exchanges, which have sought to partner with or buy
index providers in recent years. Exchanges have looked to build
lucrative franchises in trading derivatives linked to stock
benchmarks and tap revenue from a growing roster of tradable funds
tied to indexes.
Winning the Russell business provides a boost to NYSE Euronext's
technology-services division, which struggled to grow in 2012 as
banks and brokers trimmed spending. Big Board executives in
November were forced to abandon their goal of generating $1 billion
in annual technology-related revenue by 2015.
The Russell alliance comes after NYSE Euronext agreed last month
to be taken over by fellow exchange operator
IntercontinentalExchange Inc. (ICE) in a roughly $8.2 billion
cash-and-stock deal. ICE already maintains exclusive rights to
trade futures linked to the Russell 2000 index, a contract it won
from larger rival CME Group Inc. (CME) in 2007.
NYSE Euronext's U.S. futures platform maintains a separate
agreement to trade futures linked to indexes compiled by MSCI Inc.
(MSCI). Trading in small-sized MSCI-linked contracts on NYSE
Euronext's platform reached a record-high average of 20,000
contracts a day, a 67% increase over 2011, the exchange reported
this month.
Securing the Russell business marks a win for NYSE Euronext over
archrival Nasdaq OMX, which previously had distributed data for the
indexes. Representatives for Nasdaq OMX had no immediate
comment.
Shares in NYSE Euronext were 0.8% lower at $32.49 in early
trading.
Write to Ben Fox Rubin at ben.rubin@dowjones.com
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