Goldman, BNP Take Minority Stake In Trading Software Firm

Goldman Sachs Group Inc. (GS) acquired a minority stake in Broadway Technology LLC, a firm that develops electronic trading software used by big banks and hedge funds to build their own large-scale systems.

Terms of the transaction were not disclosed. BNP Paribas SA (BNPQY, BNP.FR) also invested in the firm, people familiar with the matter said, though its name wasn't announced by Broadway Technology.

Big Wall Street firms have historically taken stakes in companies that develop trading technology, market infrastructure and distribution platforms, and data and content systems, in part to support innovation and in part to save on the costs of developing systems in-house. The investments also can help position the banks for technology and regulatory changes as they evolve.

Goldman has 62 investments in market structure-related ventures, according to a November company presentation reviewed by Dow Jones Newswires, many of them made alongside key competitors like Citadel, Morgan Stanley (MS), UBS AG (UBS, UBSN.VX), Credit Suisse Group AG (CS, CSGN.VX) and Knight Capital Group Inc. (KCG).

For example, Goldman has a 19.9% stake in Direct Edge, an alternative stock exchange that sprung up in recent years to challenge the dominance of NYSE Euronext (NYX) and Nasdaq OMX Group Inc. (NDAQ). Citadel and Knight also have 19.9% stakes, while International Securities Exchange Holdings Inc. owns a 31% share, according to Direct Edge's website.

Goldman's other investments include a 9% stake in the 130-year-old London Metal Exchange, where it is battling for top minority ownership with J.P. Morgan Chase & Co. (JPM), which recently bought MF Global Holdings' stake to push its ownership to 10.9%.

Goldman also has investments in a variety of trading platforms like Tora Trading, an electronic platform in Asia, and FX Alliance Inc., an electronic currency trading firm that recently filed for an initial public offering.

Broadway Technology was founded in 2003 by Tyler Moeller and Joshua Walsky, who have backgrounds in software and high frequency trading. It develops software big banks can use as the basis to build their trading operations.

The firm, with expertise in fixed income and foreign exchange systems, is expanding into new markets outside the U.S. and new asset classes, including swaps, stocks and equities, Moeller said in an interview Tuesday.

-By Liz Moyer, Dow Jones Newswires; 212-416-2512; liz.moyer@dowjones.com

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