NYSE, BIDS to form block trading venture

NEW YORK Oct 30 (Reuters) - On Wall Street, if you can't beat 'em, join 'em.

NYSE Euronext (NYX.N), where block trading activity has been eroded by alternative trading systems like BIDS Holdings, on Tuesday said it will form a joint venture with BIDS to boost block trades on the Big Board.

In addition, NYSE will make an undisclosed equity investment in BIDS, a block stock trading venture owned by 12 Wall Street brokerages and trading firms. BIDS was launched earlier this year.

NYSE and BIDS said the venture would boost the quality and liquidity of block trades and would be open to all New York Stock Exchange members.

The deal "will serve our clients and markets well by bringing block-size orders back into contact with active traders, algorithms, and retail flow," said Duncan Niederauer, president and co-chief operating officer of NYSE Euronext.

Once a lucrative business for the 215-year-old NYSE, block trades have evaporated thanks to new technology that splits blocks into smaller lots and electronic networks that let brokers exchange shares quickly and anonymously.

NYSE and BIDS Holdings will each own half of the venture, pending approval by Securities and Exchange Commission.

The Block Interest Discovery System is owned by Bank of America (BAC.N), Bear Stearns BSC.N, Citigroup (C.N), Credit Suisse Group (CSGN.VX), Deutsche Bank (DBKGn.DE), Goldman Sachs Group (GS.N), JPMorgan Chase (JPM.N), Knight Capital Group NITE.O, Lehman Brothers Holdings LEH.N, Merrill Lynch MER.N, Morgan Stanley (MS.N) and UBS (UBSN.VX). (Reporting by Joseph A. Giannone, editing by Steve Orlofsky)