CBOE ups equity stake in HedgeStreet

CBOE ups equity stake in HedgeStreet

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Chicago Board Options Exchange (CBOE) has increased its investment in HedgeStreet as Susquehanna International (SIG) and DRW Trading (DRW) also took equity stakes in the company and launched market-making services on the exchange as well.

CBOE took a sizeable initial stake in HedgeStreet in February 2006. Terms of the equity investments were not disclosed.

Later that year, CBOE acquired a further 17.6% stake  for $2m and said it would partner it to offer binary contracts. Terms of the latest buys were not disclosed but, according to reports, DRW and Susquehanna have invested a combined $10m in the California-based business.

The move marks an ongoing strategy by HedgeStreet to develop a more institutional component to the exchange, which was founded in 2004 as a retail trading engine that offers a range of binary options. The exchange offers contracts on currencies, commodities, real estate and hurricanes.

HedgeStreet chairman and CEO Stephen Race said the exchange plans to offer a new institutional trading platform later this year with similar contracts that carry larger denominations. Susquehanna is a major market maker in options markets and DRW is one of the largest market markers in CME's Eurodollars as well as CME economic auctions, housing options and weather derivatives.

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