Goldman deal signals changing emphasis: NYSE Euronext

By Luke Jeffs

LONDON (BestGrowthStock) – NYSE Euronext said a deal to support U.S. investment bank Goldman Sachs’s new European trading system showed the exchange was keeping pace with other large rivals in looking to diversify their offerings.

NYSE Euronext, which runs stock and futures exchanges in the United States and Europe, said Monday it was supplying Goldman’s London arm with technology to support Sigma X MTF, the share trading system the U.S. bank plans to launch in the second quarter of next year.

“Traditionally we are known for operating global markets, but this is the first time that our trading platform and our infrastructure have been chosen by a major broker dealer,” said Stanley Young, chief executive of NYSE Euronext’s IT arm NYSE Technologies.

Goldman already has an internal trading system, or crossing network, called Sigma X but it has opted to launch a more tightly regulated MTF (multi-lateral trading facility) version amid growing pressure on broker crossing networks (BCNs) from regulators.

The European Commission last week outlined plans to force BCNs to be regulated akin to MTFs, a move that could restrict brokers’ activities.

Goldman Sachs was the third large broker — after Nomura

and UBS – to have committed to launch an MTF but it was the first to have outsourced its technology to an exchange.

“There are key advantages to the service that NYSE is supplying to Sigma X MTF — the service will be subject to monitoring and surveillance conducted by a regulated market and the technology platform gives us time to market benefits,” David Shrimpton, incoming chief operating officer of Sigma X MTF at Goldman Sachs, told Reuters in an interview.

The world’s largest stock exchange groups, including NYSE Euronext, Nasdaq OMX, the London Stock Exchange and Deutsche Boerse, have been keen to diversify their businesses away from pure trading revenue.

Supplying technology to fledgling platforms and exchanges has become attractive in recent years because the income is consistent when compared to trading revenue dictated by increasingly volatile markets.

Young said of the Goldman Sachs deal: “It is a significant development in the diversification of our business and a resounding endorsement of our strategy to build a broad based, diversified technology and markets business.”

(Editing by Dan Lalor)

Goldman deal signals changing emphasis: NYSE Euronext