E*Trade Financial Corp. (ETFC) agreed to sell a market-making unit that had been the subject of a regulatory inquiry to Susquehanna International Group LLP for $75 million.
E*Trade is selling G1 Execution Services LLC along with a promise to send 70 percent of customer equity orders to the business for five years, according to a statement today.
The deal was announced two months after E*Trade said the Financial Industry Regulatory Authority was looking into how G1 Execution and another division, E*Trade Securities LLC, routed customer orders. When New York-based E*Trade announced better-than-estimated earnings and plans to find a buyer for G1 Execution in July, its stock surged 7.9 percent, the biggest rally since August 2011.
The transaction will let E*Trade “concentrate our time and attention on the core business and our customers,” Chief Executive Officer Paul Idzik said in the statement.
Profits at market-making business such as G1 Execution are under pressure in the U.S. as computerized trading squeezes margins and volume stagnates. G1 Execution has proved to be a distraction this year, with E*Trade disclosing that it found “shortcomings” in how it measured whether trades were completed at the best prices.
In the same statement announcing the sale, E*Trade reported third-quarter net income of $47 million.
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