As predicted, the global consolidation of exchanges is accelerating and the trend is taking out a storied member of the national market system (NMS). This morning, the Boston Stock Exchange (BSE) said The Nasdaq Stock Market would acquire it in a transaction worth $61 million. The agreement is subject to approval by the BSE members and the Securities and Exchange Commission.

The sale to Nasdaq includes the BSE and its key assets: the BSE ‘s holding company (BSE Group), the Boston Equities Exchange (BeX), the Boston Stock Exchange Clearing Corporation (BSECC), and BSE’s regulatory authority over the Boston Options Exchange (BOXR). What’s not included are the Boston Options Exchange (BOX), an electronic options trading facility of the BSE, and LeveL ATS, a dark book alternative trading system, incubated by the BSE but owned by five leading broker-dealers.

BSE is currently in negotiations with the Montreal Exchange, a founding partner of the BOX since 2002, to sell its BOX units, according to the release. In a separate statement, the BSE says the Montreal Exchange is seeking to increase its ownership position of BOX by acquiring the 21.9 percent partnership interest currently held by the BSE. As part of the acquisition of BSE, Nasdaq will operate BOXR, the regulatory services provider to BOX, which is an options trading facility of the BSE.

The sale of the BSE quickly follows the closure of the Boston Equity Exchange (BeX), an electronic stock trading facility that suspended operations last month in a struggle to gain market share amidst strong competition. That alone cast doubt on whether smaller regional exchanges could compete against the likes of NYSE Euronext and Nasdaq in U.S. equity trading even though new trading regulations Regulation NMS are supposed to level the playing field.

“Though it is a sad moment for the BSE and its 173 year heritage of innovation and service to the U.S. markets, we are not immune to the global consolidation that is occurring in this industry,” stated Michael Curran, chairman and CEO at BSE. “We believe our sale to Nasdaq is a favorable outcome for our seat holders and we are proud to become part of The Nasdaq Stock Market and its own tradition of innovation and service,”

The deal is attractive in that Nasdaq gets to utilize a second SRO (self regulatory organization) license in both equities and options to enhance its growing trading platforms in the transaction business, noted the release.

The BSE board of directors has approved the sale, which is slated for completion in the first quarter of 2008.

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