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Jan 28 (Reuters) - KCG Holdings Inc said it will sell its foreign exchange trading platform, KCG Hotspot, to BATS Global Markets for $365 million in cash.
Shares of KCG, which trades equities, fixed income, currencies and commodities through both voice and automated execution, were up about 3.1 percent at $12.35 premarket.
Hotspot caters to a broad group of trading participants, including institutions, dealers and retail broker clients.
Reuters exclusively reported earlier this month that BATS was in discussions to buy Hotspot.
BATS, the No. 2 U.S. stock market operator by volume, runs four U.S. stock exchanges, an options exchange and the biggest pan-European stock market.
KCG, which owns a 16.5 percent stake in privately held BATS, said in October it was exploring strategic options for Hotspot amid heightened regulatory pressures in the foreign exchange market.
Regulators in Britain are probing the $5 trillion-a-day foreign exchange market following allegations that bank traders used advance knowledge of client orders to try to manipulate foreign exchange benchmarks.
Forex markets have been volatile this month, following the Swiss National Bank’s decision to remove a three-year-old cap on the value of the Swiss franc against the euro.
Retail-focused foreign exchange broker FXCM Inc was rescued by Leucadia National Corp with a $300 million emergency capital after its customers lost more than $200 million from the surging Swiss franc.
KCG said on Wednesday that the deal is expected to close in the second quarter and increase its tangible book value by about $2 per share.
Jefferies LLC was the financial adviser while Sullivan & Cromwell LLP was the legal counsel to KCG.
J.P. Morgan Securities LLC was the financial adviser to BATS while Davis Polk and Wardwell LLP was the legal counsel.
Reporting by Avik Das in Bengaluru; Editing by Sriraj Kalluvila