In an attempt to expand its over-the-counter (OTC) initiatives in the equity markets, on Tuesday Nasdaq OMX Group Inc. (NDAQ) announced that the company has increased its equity ownership in Agora-X, LLC to 85% from the former stake of 20%, effective immediately.

Agora-X is an electronic communications network for institutional trading in OTC commodity contracts. It also offers automatic clearing through CME ClearPort, the transaction clearing wing of CME Group Inc. (CME), on certain OTC derivatives along with an electronic audit trail on all transactions.

Although the financial terms of the deal remained undisclosed, the deal is expected to be beneficial to both the parties. The investment in Agora-X can help Nasdaq’s OTC commodity traders’ market by increasing efficiencies through cost-savings, transparency and liquidity. This in turn can aid the top-line growth of Nasdaq that sunk 8% in the fourth quarter due to declining volumes and transaction services.

The deal can also help increase client activity in the electronic marketplace while also creating growth opportunities for Agora-X that can now gain access to all of Nasdaq’s resources. The new joint work technology will help the companies display the bids and offers for the derivative contracts on Agora-X’s exchange forum, thereby creating time and pricing synergies for the clients.

Nasdaq has been growing continuously through its restructuring programs. Even internally the company had restructured its debt strategy, completing its $1 billion underwritten public offering of senior notes and its borrowing from the $950 million senior unsecured credit facility in Jan, 2010. This new debt was utilized to repay all outstanding debt taken under its existing senior secured credit facilities and cease the associated credit agreement.

Overall, we believe the ongoing restructuring developments are crucial to Nasdaq given the company’s competitive environment in the backdrop of the current favorable economic trends that could provide more opportunities and leverage.

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