Chicago Mercantile Exchange (CME) has acquired options trading technology firm Liquidity Direct Technology. Financial terms of the deal were not disclosed.
CME will purchase substantially all of the assets of Liquidity Direct, including its operating assets and intellectual property. Under the agreement, Liquidity Direct's president and CEO Neal Brady has joined the exchange as a consultant to implement and promote the platform.
Founded in 2000 by a group of options industry participants, the Liquidity Direct platform combines market making, indicative quotes, user-defined spread combinations and electronic request for quote (e-RFQ) functions.
CME says the technology will complement its existing Globex system and allow it to improve services for its options trading customers. The exchange will begin using the platform for wholesale trading of eurodollar options contracts in the second half of 2004. Other options products will follow.
Once implemented, CME also intends to use the Liquidity Direct system to provide transaction processing and other business services to third parties.
Commenting on the acquisition, Terry Duffy, CME chairman, says: "Liquidity Direct facilitates a unified liquidity pool that offers participants more efficient executions for their complex option combination trades."
CME says electronically traded interest rate futures volume on Globex increased 120% in Q4 2003 compared to the year ago quarter.