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Citi to acquire electronic market-making and proprietary trading firm ATD

Citi Markets & Banking has agreed to acquire Automated Trading Desk, a specialist in electronic market making and proprietary trading for approximately USD680m in cash and stock. Citi says the acquisition will make it a top-tier aggregator of equity order flow and provide institutional, broker/dealer and retail clients with access to deeper pools of liquidity.

ATD specialises in the creation of systems for automated trading and customised equity execution solutions through its broker-dealer subsidiaries, offering automated execution solutions in all domestic equity markets, including listed, over-the-counter, exchange-traded fund and bulletin board marketplaces.

Last year, Citi says, ATD accounted for around 6 per cent each of all New York Stock Exchange and Nasdaq trading volumes. ATD has around 120 broker/dealer customers and trades, on average, more than 200 million shares a day.

The firm will operate as a unit of Citi's global equities business, complementing the investment in electronic trading and execution made by the group as well as enhancing its traditional equities sales and trading capabilities. Citi says it plans to extend ATD's technology and trading expertise to markets around the world that are experiencing similar growth in trading volume and electronic execution.

'ATD's strong management team and the company's market-leading technology will help us provide best execution to all of our clients by enhancing liquidity through the aggregation of greater flow,' says Citi's head of global equities James Forese. 'The combination of Citi's global equities business and ATD will create a leading US stock trading platform.'

ATD will maintain its headquarters in Mount Pleasant, South Carolina, while Steven Swanson will remain the firm's chief executive and lead the global expansion and development of Citi's electronic market-making capabilities.

'Citi offers ATD a unique opportunity to use our technology in both domestic and international markets,' Swanson says. 'The combination of our businesses will position us as a leader amid the rapid evolution of global market structure.'

The acquisition of ATD is the latest in a series of acquisitions and investments made by Citi in recent years to strengthen its electronic and alternative execution business, including Lava Trading, Knight's options market-making business, TD Waterhouse Capital Markets and the OnTrade ECN.

Total consideration for the acquisition comprises USD102.6m in cash and around 11.17 million shares of Citi stock. The transaction is expected to close in the third quarter, subject to regulatory approval.

Citi Markets & Banking acted as financial adviser to Citi and Skadden, Arps, Slate, Meagher & Flom was primary legal counsel. Financial Technology Partners and FTP Securities acted as exclusive strategic and financial advisors to ATD and provided a fairness opinion to ATD's board of directors, while Blank Rome acted as the firm's primary legal counsel.

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