NYSE Euronext (NYX) plans to shutter a subsidiary stock-trading
unit set up to handle big share orders, saying the venture failed
to attract enough business.
The Big Board parent aims to stop operating the so-called New
York Block Exchange on Feb. 28, exchange officials wrote in
regulatory filing Friday, ending a four-year-old joint venture with
broker-dealer BIDS Holdings LP.
"We thought it was an interesting market structure and tried it
for several years, but haven't got enough traction to make it
work," said Tim Mahoney, chief executive of BIDS, in an interview.
A spokesman for the NYSE declined further comment.
The planned closure comes as NYSE works to trim underperforming
investments and ventures as part of a plan to cut $250 million in
costs by the end of 2014. Last fall NYSE Euronext moved to shut a
Paris-based platform for trading greenhouse gasses and the exchange
group aims to unload its investments in an Indian commodity
exchange and London-based clearinghouse operator LCH.Clearnet.
The New York Block Exchange launched in 2009 as part of NYSE's
efforts to fend off competition from "dark pools"--private
electronic stock-trading platforms that have drawn business away
from traditional exchanges. So-called dark pools were set up
originally to enable large-scale investors like mutual funds to
shift big chunks of stock without alerting faster-moving traders
that inhabit exchanges, who may drive up the cost of carrying out a
large transaction.
Stock trading on dark pool venues and brokerages that deal
shares internally rose to a record level in January, reaching
nearly 37%, according to figures from Raymond James Financial. NYSE
has launched other efforts to attract business back to its
exchanges, including a program introduced last summer to deliver
more-attractive prices on share orders for individual investors
that trade through discount brokerages.
NYSE and BIDS envisioned the New York Block Exchange venture
supporting institutions that wanted to move 10,000 or more shares
at a time anonymously by enabling trades to happen at a broader
range of potential prices. On Friday, however, NYSE wrote in a
filing to the Securities and Exchange Commission that the unit will
close "because after years of operations the facility has not
garnered enough volume to achieve critical mass and does not have
strong support customers."
As it cuts costs, NYSE is working toward its agreed $8.2 billion
takeover by IntercontinentalExchange Inc. (ICE), an Atlanta-based
futures market operator.
Write to Jacob Bunge at jacob.bunge@dowjones.com
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