March 9 (Bloomberg) -- Barclays Plc, the third-biggest U.K. bank, agreed to buy Bear Wagner Specialists LLC from JPMorgan Chase & Co., shrinking the number of market makers at the New York Stock Exchange to five.

Barclays will merge its market-making business with Bear Wagner by April, the Big Board said in a statement today. The transaction will nearly double the London-based bank’s reach at the NYSE, making it responsible for maintaining orderly trading in 850 securities.

The combination vaults Barclays from fifth place in terms of trading volume at the NYSE to challenge Bank of America Corp. for No. 2, according to data compiled by the Big Board. The number of specialists has fallen from about 55 in 1986 as technology improvements eroded profit. In 2007, Van der Moolen Holding NV and SIG Specialists Inc. shuttered or sold their NYSE businesses amid more electronic trading.

“We’re going against the trend by saying that now is a good time to increase our footprint,” William White, a managing director at Barclays, said in an interview today. “It’s more important now than ever to increase interaction with clients.”

The deal builds on Barclays’s purchase last year of Lehman Brothers Holdings Inc., which took over Van der Moolen’s business. Barclays is paying about $30 million, according to a person familiar with the matter who declined to be identified because the transaction is private. White declined to comment on the price.

System Overhaul

Last year, the NYSE overhauled trading systems and made it easier for floor brokers to trade. Market makers are required by the exchange to buy or sell shares when they can’t match orders from other traders. They used their own capital to trade 9.8 percent of the shares that changed hands at the Big Board in February as the S&P 500 tumbled, compared with 2.6 percent a year earlier.

After April, Barclays will be responsible for trading in 109 companies in the Standard & Poor’s 500 Index such as Walt Disney Co. and handbag maker Coach Inc. Goldman Sachs Group Inc.’s Speer Leeds & Kellogg was the biggest last year by trading volume, and LaBranche & Co. was No. 3, NYSE data show. The closely held New York-based Kellogg Specialists Group is the smallest of the five specialists.

JPMorgan bought Bear Wagner along with Bear Stearns Cos. last year. Bear Wagner is the specialist for more than 380 stocks, including the buyout firm Blackstone Group and online travel agent Orbitz Worldwide Inc., according to its Web site.

To contact the reporters on this story: Edgar Ortega in New York at ebarrales@bloomberg.net.

Last Updated: March 9, 2009 18:09 EDT