According to two people with knowledge of the matter, who asked not to be named, because the negotiations are still private, Goldman Sachs Group Inc. has decided to sell its New York Stock Exchange market-making division to a Dutch investment firm.
The people reported that Goldman Sachs Group Inc. is in talks with IMC (International Marketmakers Combination) Financial Markets. One of them revealed that the company estimates the price of the deal at about 30 million dollars.
The unit in question that is to be sold was once part of Spear, Leeds and Kellogg LP, which was acquired in 2000 by Goldman Sach Group for 5.4 billion dollars.
One of the analysts working for JMP Group Inc. – Mr. Devin Ryan commented for Bloomberg: “The business has evolved away from humans on the exchange. Only a fraction is being done on the floor with humans versus how much is being done electronically.”
After the acquisition of Spear, Leeds and Kellogg LP, which was at the time the biggest so-called specialist firm on the New York Stock Exchange, Goldman became one of the main players on the equities trading field in the U.S. However, soon after the deal was finalized, the stock trading shifted in a different direction, away from the floor-based model, making human traders slower than certain computer algorithms, which could complete the process of buying and selling in parts of a second.
Due to this fact, human traders became less efficient, which made electronic transactions more preferred. As reported by Bloomberg, E.E. “Buzzy” Geduld, who sold Herzog Heine Geduld in 2000 as a result of the trend, said: “For years, I’ve thought that the exchange was a dinosaur. Now if you go down to the exchange, there’s not a lot that goes on down there.”
Sang Lee, who is a managing partner of Aite Group LLC commented the decision of Goldman Sachs Group Inc. to sell its New York Stock Exchange market-making unit: “It’s an incredibly competitive marketplace. The amount of investment you need to put into the operation doesn’t justify the amount of profit.”
Goldman Sachs Group Inc. rose by 1.26% in New York on Tuesday to settle at $165.92 per share, marking a one-year change of +13.61% and a market value estimated at $75.12 billion. According to CNN Money, the 26 analysts offering 12-month price forecasts for Goldman Sachs Group Inc. have a median target of $180.50, with a high estimate of $206.00 and a low estimate of $137.70. The median estimate represents a +8.79% increase from the last price of $165.92.
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