Direct Edge CEO Says Focused on Prospects as Independent Company

Direct Edge Holdings LLC is focused on expanding its business on its own, according to its chief executive officer, a sign that buyout talks that were reported in July may have cooled.

The owner of two U.S. equity exchanges based in Jersey City, New Jersey, continues to review its capital market options, William O’Brien said in a phone interview. The Wall Street Journal reported two months ago that TMX Group Inc., (X) the parent company of the Toronto Stock Exchange, was negotiating to acquire the fourth-largest U.S. stock exchange operator.

“We have like any other major global stock market been exploring our capital markets alternatives,” O’Brien said. “That runs the gamut from exploring public market alternatives to private market transactions and M&A activity. Right now we’re not having discussions with anybody about a significant transaction. There are no discussions currently ongoing.”

O’Brien said the appeal of different options “will vary based on market conditions, based on needs and the desires of all of our stakeholders.” He remains enthusiastic about Direct Edge’s prospects as an independent company, he said.

Carolyn Quick, a spokeswoman for TMX in Toronto, declined to comment. The company completed a transaction July 31 in which Maple Group Acquisition Corp., whose 12 members include Toronto- Dominion Bank, Ontario Teachers’ Pension Plan and Manulife Financial Corp., acquired 91 percent of its shares.

Speculation over a Direct Edge sale dates to December when the U.S. Justice Department made the divestiture of Deutsche Boerse AG (DB1)’s 31.5 percent stake, held through its International Securities Exchange unit, a condition of its merger with NYSE Euronext. (NYX) European regulators blocked the trans-Atlantic union two months later and the Frankfurt-based exchange never sold.

Knight Capital Group Inc. (KCG), Goldman Sachs Group Inc. (GS) and Citadel LLC each own almost 20 percent of Direct Edge. A group of financial firms also own a stake in the exchange operator.

To contact the reporter on this story: Nina Mehta in New York at nmehta24@bloomberg.net.

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.