Susquehanna and DRW buy into HedgeStreet

Susquehanna and DRW buy into HedgeStreet

Pennsylvania-based securities firm Susquehanna International and Chicago's DRW Trading Group have invested a reported $10 million in electronic derivatives market HedgeStreet.

HedgeStreet, which was launched in 2004, offers futures and options contracts in commodities such as crude oil, gasoline and precious metals. The regulated exchange also offers financial instruments such as housing prices, the consumer price index (CPI) and weekly mortgage rates.

Last year the Chicago Board Options Exchange (CBOE) acquired a 17.6% stake in the unit for $2 million and said it would partner with HedgeStreet to offer binary options and futures.

Terms of the latest funding were not disclosed by HedgeStreet, but according to press reports DRW and Susquehanna have invested a combined $10 million in the California-based business.

HedgeStreet says the new equity investments form part of a larger funding round, which includes further financing from CBOE.

As well as investing in the business DRW and Susquehanna have agreed to be market makers on the HedgeStreet exchange. Stephen Race, chairman and CEO of HedgeStreet, says this development will enable the exchange to offer "better pricing, larger sizes, and narrower spreads for our trading members".

In addition, HedgeStreet plans to launch an institutional platform later this year that will carry a similar range of contracts in larger denominations.

In a separate move the US Futures Exchange (USFE) - which was formed out of the remnants of Eurex US, the ill-fated electronic futures market launched in Chicago in 2004 - has launched a new futures product that lets investors take a position on the fate of the Chicago Board of Trade (CBOT), which has received merger proposals from both the Chicago Mercantile Exchange (CME) and IntercontinentalExchange (ICE).

USFE says contracts are the first of its binary event futures and were self-certified with the Commodity Futures Trading Commission (CFTC).

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