Citigroup Inc. agreed to acquire Automated Trading Desk, an electronic market maker and proprietary trader, for about $680 million in cash and stock.
The deal represents a further push by Citigroup into the trading of stocks by computerized programs rather than by people.
Citigroup said the purchase price is made up of $102.6 million in cash and about 11.17 million shares of Citi stock. The deal is expected to close in the third quarter.
Automated Trading Desk has about 120 broker/dealer customers. It trades, on average, more than 200 million shares a day and presently handles about 6% of National Market System trading volume. It was founded in 1988 and uses computer algorithms instead of traders. It makes profit by buying and selling rapidly for itself and behalf of clients.
Firms like ATD have become increasingly important, often executing orders anonymously for customers of online brokerage firms. Trading in less than a second, the firm often collects a tiny price, or spread, between where it buys and sells shares.
This deal is the latest in a string of acquisitions for the world's largest financial-services firm by market value. Citigroup has been trying to increase its market share in trading U.S. stocks while embracing computer programs that could improve its efforts to trade stocks overseas.
Citigroup recently bought a majority of Nikko Cordial Corp. (8603.TO), Japan's third-largest brokerage, for more than $7.5 billion, as well as hedge fund Old Lane Partners LP for nearly $800 million. Other acquisitions include Lava Trading, TD Waterhouse Capital Markets and the OnTrade ECN.
Automated Trading Desk will operate as a unit of Citi's Global Equities business and will maintain its headquarters in Mount Pleasant, S.C.. Chief Executive Steven Swanson will retain his role and help with the global expansion and development of Citi's electronic market making services.
