Options Press

Private-equity firm buys two Chicago options shops


Crain's Chicago Business

May 27, 2014

New York-based private-equity firm General Atlantic LLC plans to take control of two Chicago-based options trading shops, OptionsHouse LLC and TradeMonster Group Inc., by investing in each of them and then merging the companies.

General Atlantic said in a statement today it is buying OptionsHouse from its owner, Chicago-based Peak6 Investments LP, and separately buying a majority stake in TradeMonster. The combined company will keep its headquarters in Chicago.

Both Chicago companies cater to Main Street investors, whom the options industry and the Chicago Board Options Exchange have long wooed.

The buyouts, which are subject to regulatory approval, come after a string of options industry transactions over the past five years put larger Chicago-based options shops in the hands of big retail investment houses. That left smaller independent companies like OptionsHouse and TradeMonster competing against deep-pocketed companies like Charles Schwab Corp. and TD Ameritrade Holdings Corp. The larger players could afford to offer lower prices even as technology and regulatory costs are rising.

“The cost of business went up and it's a difficult landscape for everyone,” said Mark Longo, who leads Chicago-based online radio options broadcaster Options Insider Inc. “You need economies of scale in this business now to compete.”

The privately held companies declined to provide trading volume or customer account information about the Chicago options firms. That information would provide a sense of their size relative to the market and each other.

Schwab purchased Chicago-based OptionsXpress Holdings Inc. in 2011 and TD Ameritrade bought Thinkorswim Group Inc. in 2009.

General Atlantic also owns a stake in Jersey City, New Jersey-based KCG Holdings Inc., the successor firm to Chicago-based Getco LLC, which bought Knight Capital Group Inc. in 2012. While TradeMonster and OptionsHouse handled retail investors, KCG, by way of Getco's legacy, is known as a high-frequency trader that seeks to profit from price differences in the market. Such market-makers often try to attract or buy the order flow of less sophisticated retail investors.

General Atlantic is seeking a new chief executive for the combined company, said Andrea Calise, a spokeswoman at the public relations firm representing the three companies. OptionsHouse CEO George Ruhana plans to stay with that company through completion of the transaction, expected by the third quarter, but then will return to Peak6, she said.

TradeMonster CEO Dirk Mueller-Ingrand will join the board of the combined company, she said. Most of the existing TradeMonster owners, including Knight Capital and Wolverine Holdings LP, will retain a stake in the combined company.



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The Options Insider Radio Network

The Options News Rundown

Your source for the most important news and information from the world of options.

The Options News Rundown

The Options Insider Radio Network

All of our radio programs in one convenient place.

The Options Insider Radio Network

Options Insider Radio

The original options podcast. Features interviews with leading options figures.

Options Insider Radio

The Option Block

This high-octane program features education, analysis, strategies and unusual activity.

The Option Block

Volatility Views

The premier radio program for volatility traders.

Volatility Views

The Long And Short Of Futures Options

Your source for futures options information.

The Long And Short Of Futures Options

The Advisor's Option

Arming advisors with the info necessary to manage risk.

The Advisor's Option

Options Boot Camp

Get into peak options trading shape.

Options Boot Camp

Options Insider Special Events

Compelling panel & special event recordings from the options world.

Options Insider Special Events

OIC's Wide World of Options

A dynamic mix of current events, investor resources, & strategy insights.

OIC's Wide World of Options

Trading Tech Talk

We break down all the amazing technology that takes your trades from the click of a mouse to the clearinghouse.

Trading Tech Talk

Options Playbook Radio

Break down cutting-edge options strategies and learn how to incorporate them into your portfolio

Options Playbook Radio

Options Oddities

We track all the unusual options trading activity on Options Oddities.

Options Oddities

This Week in Futures Options

The program designed to help active futures options traders stay on top of this ever-changing marketplace. 

This Week in Futures Options

The Business Show

If you like business, if you like humor, if you like stock symbols, this is the podcast for you.

The Business Show

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