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Nyse buys out SIAC

26 October 2006  |  13021 views  |  0 Statue of Liberty

The New York Stock Exchange has confirmed that it is buying the one-third stake it doesn't already own in the Securities Industry Automation Corporation (SIAC) from the American Stock Exchange for $40 million.

Nyse said in regulatory filing in September that it had received a notice stating that Amex intends to "materially decrease its use of SIAC's services" and that it was in talks to buy Amex's 33% stake in the unit.

Founded in 1972 by the two exchanges, SIAC runs the computer systems and communications networks that power the two exchanges and disseminates market data.

In a statement the New York exchange says upon completion of the transaction, which is expected to close in November, it will fully own SIAC.

Nyse group president and co-COO Jerry Putnam, who is also SIAC chairman and interim CEO, says: "We view this as a strategic opportunity to assume greater control of a meaningful portion of our cost base that will allow us to drive improved efficiencies and growth."

He says following the transaction, Amex will continue to be a customer of SIAC, although the exchange will continue reduce its usage of SIAC's services.

The sale of the stake comes as Amex is gearing up to launch its own electronic market platform later this year. Neal Wolkoff, chairman & CEO of Amex, says: "We look forward to a new and independent technology future for the Amex together with the launch of AEMI, our new state-of-the-art electronic market platform."

Nyse's ownership of SIAC will make it easier for it to integrate its communications and market data operations with those of Archipelago which it acquired last year.

Analysts say the deal will also make it easier for Nyse to switch Euronext's technology outsourcing model if the merger between the two market operators goes ahead.

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