December 14, 2016 / 4:27 PM / 7 months ago

NYSE to acquire NSX amid U.S. exchange consolidation

3 Min Read

The New York Stock Exchange logo is displayed on a screen at the New York Stock Exchange in New York, United States, July 2, 2015.Brendan McDermid

(Reuters) - Intercontinental Exchange Inc's (ICE.N) New York Stock Exchange unit said on Wednesday it agreed to acquire the National Stock Exchange, giving NYSE Group a fourth U.S. exchange license.

Terms of the deal, which is expected to close in the first quarter of 2017, were not disclosed. ICE said the financial impact of the acquisition would not be material.

NYSE said it would consult with NSX members and market participants, including retail brokerage firms, before finalizing its operational plans for the exchange.

A spokeswoman for NYSE had no comment. Representatives for NSX were not immediately available.

The deal continues the consolidation of the U.S. equity market as exchanges seek scale and variety in their trade execution models.

In September, CBOE Holdings Inc (CBOE.O) said it would buy stock market operator BATS Global Markets Inc BATS.Z for about $3.2 billion to diversify its revenue sources amid muted trading volumes. And in March, Nasdaq Inc (NDAQ.O) said it would buy U.S. options exchange operator International Securities Exchange for $1.1 billion, giving it an additional three stock exchange licenses.

Jersey City, New Jersey-based NSX had said in a regulatory filing on its website dated Dec. 9 that it would cease trading operations once the market closes on Friday due to a lack of trading volume.

The closure would have come just a year after NSX relaunched under new management as a low-cost alternative to other exchanges, following a shutdown of more than a year-and-a-half, also due to a lack of trading volume.

NYSE on Wednesday said NSX would no longer cease trading as a result of the deal.

NSX, which first launched in 1885 as the Cincinnati Stock Exchange, has a market share of around 0.01 percent.

NYSE Group currently operates three exchanges: NYSE, NYSE MKT and NYSE Arca Equities, each of which has a different operating model.

Editing by Jonathan Oatis

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