The Nasdaq OMX Group, Inc. announced that it will acquire an interest in a new alternative trading system for commodities.
Nasdaq OMX Group has agreed to invest up to US$7.5 million in Agora-X, LLC, a subsidiary of FCStone Group, Inc.
FCStone, Agora-X and Nasdaq OMX have signed definitive agreements for Nasdaq OMX to acquire a 20% equity interest in Agora-X if the full US$7.5 million is committed, pending fulfillment of closing conditions and milestones.
Agora-X is developing a new electronic communications network for institutional trading in over-the-counter commodity contracts. The new exchange is expected to launch in mid-2008. The trading platform initially will handle option “look-alikes” in energy and agricultural commodities, as well as commodity swaps, with the scalability to add other OTC derivatives.
The proceeds of the Nasdaq OMX investment will be used to continue such development, repay a portion of the advances made to Agora-X by FCStone and for general business purposes.
“We are delighted to have Nasdaq OMX join us as a developmental investor in transforming OTC commodity trading through the creation of Agora-X. Financial institutions and global companies seeking to hedge energy and agricultural assets will find strategic value in this efficient, liquid trading platform,” said Pete Anderson, FCStone’s CEO. “FCStone has served as an incubator for Agora-X to deliver better, more efficient order fulfillment for OTC participants, and we look forward to making this market a reality.”
“Partnering to develop Agora-X fits with Nasdaq OMX’s strategy to bring efficiencies and cost savings to the broader trading arena,” said Chris Concannon, executive vice president, Nasdaq OMX. “We believe that with Agora-X, OTC commodity traders can benefit from the same efficiency, cost savings, transparency and liquidity that Nasdaq OMX has brought to the equity markets.”
Brent Weisenborn, CEO of Agora-X, added, “The global trading community has seen tremendous growth in OTC commodities and related derivatives, but the technology hasn’t kept pace. Financial institutions and companies hedging energy and agricultural positions through OTC contracts currently rely on a call-around system. Agora-X will transform this market by offering traders greater liquidity, a clear view of pricing and quick fills on orders.”
Nasdaq OMX to invest in Agora-X
Partners with commodities firm to create new electronic marketplace for OTC commodity contracts
- By: James Langton
- February 28, 2008 February 28, 2008
- 13:45