Goldman Sachs Said to Seek Sale of NYSE Market-Making Unit

Apr 01, 2014 2:48 pm ET

(Updates with Redi stake sale in fourth paragraph, IntercontinentalExchange in sixth.)

April 1 (Bloomberg) -- Goldman Sachs Group Inc. is seeking a buyer for its New York Stock Exchange designated market-making business acquired through the 2000 purchase of Spear, Leeds & Kellogg, a person briefed on the matter said.

The bank is in the early stages of the process and has held talks with potential buyers, according to the person, who requested anonymity because the discussions are private. The Financial Times reported on the planned sale earlier today.

Goldman Sachs, which reaps the most revenue from equities trading among banks globally, paid about $5.4 billion in stock and cash for Spear Leeds. The purchase remains the biggest in the history of the firm, which is the world’s largest adviser on mergers and acquisitions in 11 of the past 13 years, according to data compiled by Bloomberg.

The business for sale is now valued at about $30 million, the FT reported, citing analysts it didn’t identify. Last year, Goldman Sachs agreed to sell a majority stake in its Redi trading-technology unit that was based on software acquired when it bought Spear Leeds.

Tiffany Galvin, a Goldman Sachs spokeswoman, said the company doesn’t comment on speculation.

The NYSE, purchased in November by Atlanta-based IntercontinentalExchange Group Inc., relies on traders known as designated market markers, or DMMs, to facilitate buying and selling. The firms help run the opening and closing auctions of NYSE-listed stocks.

Dwindling Ranks

They used to be known as specialists, and there were dozens of them. Reduced profits from equity trading dwindled their ranks during the past decade. London-based Barclays Plc and Jersey City, New Jersey-based KCG Holdings Inc. are the biggest DMMs, followed by Goldman Sachs, according to a person with direct knowledge of the matter.

Spear Leeds was the NYSE’s top specialist firm and the No. 3 market maker on the Nasdaq Stock Market when the investment bank agreed to acquire it in September 2000 from Peter Kellogg and his family.

Even if Goldman Sachs gives up its spot on the NYSE floor in Manhattan, that doesn’t mean it will stop making markets in U.S. stocks. Almost all American equity trading is done electronically, and banks are among those that provide liquidity on computerized platforms such as NYSE Arca, the Nasdaq Stock Market and the four exchanges owned by Bats Global Markets Inc. Goldman Sachs is among the owners of Bats.

--With assistance from Sam Mamudi in New York and Nick Baker in Chicago.