FRANKFURT Deutsche Boerse (DB1Gn.DE) is considering selling its International Securities Exchange (ISE), a source familiar with the company's thinking said on Thursday.
No banks have been mandated to assist Deutsche Boerse with a sale of its U.S. options exchange, the person said, adding that valuation levels were currently not attractive enough for Deutsche Boerse to pursue a sale in the short run.
ISE would only fetch around $1 billion to $1.5 billion, the person said, around half what it paid to buy it.
The move follows a series of setbacks in the United States for the Frankfurt-based exchange operator including a failure to gain permission to offer options on some key U.S. indexes.
A spokeswoman for Deutsche Boerse declined to comment.
Deutsche Boerse bought ISE - then the second-largest U.S. options market - in 2007 for about $2.8 billion, but was forced to book a series of impairment charges on the asset, including one of 415 million euros in the fourth quarter of 2009.
Through its ISE platform Deutsche Boerse attempted to make a push into the market for U.S. equity options, complementing its own electronic derivatives platform Eurex, which offers trading in European equity options, index options and futures.
Options trading volume has been hit by the introduction of new bank rules which force traders to underpin options bets with more capital.
Deutsche Boerse bought ISE after its own attempts to grow organically failed to take off. In February 2004, Eurex launched a small electronic U.S. futures exchange but failed to significantly challenge the Chicago Board of Trade’s monopoly of trading in U.S. Treasury futures contracts.
Despite having modern electronic trading technology, obstacles in getting regulatory approval for trading certain products, as well as aggressive lowering of prices by the incumbents, saw it struggle to poach market share from the CBOT which led it to sell a majority stake in its U.S. business to Man Group PLC (EMG.L) , a futures broker and alternative investment provider, in 2006.
Earlier on Thursday, Bloomberg reported that Deutsche Boerse was considering a sale of ISE, and has been exploring a possible sale for several months.
(Reporting by Edward Taylor and Andreas Kroener; Editing by Thomas Atkins and Robin Pomeroy)