The London Stock Exchange Group has acquired MillenniumIT, a Sri Lankan technology services provider, as a first step to replacing its TradElect platform with a “highly scalable and very low latency” multi-asset trading system. The LSE said the new platform would be introduced by the end of 2010 and predicted annual cost savings of at least £10 million from the 2011-12 financial year.
Following the deal, worth US$30 million, MillenniumIT’s CEO, Tony Weeresinghe, will report directly to Xavier Rolet, CEO of the exchange group. MillenniumIT will continue to serve existing clients and will expand its global exchange technology business.
“Improving our technology and increasing our competitive position in the fast-moving trading environment is vital,” said Rolet. “This transaction enables the group to implement a new, more agile, innovative and efficient IT capability for our future business development, as well as running a new cash trading platform which will provide substantially lower latency, significantly higher capacity and improved scalability.”
Rolet added that the purchase would give the LSE a “footprint” in Asia.
“MillenniumIT is a proven business, already serving multiple clients in multiple geographies, including some of the best known in their fields,” he said.
MillenniumIT will become the LSE’s in-house software development team, replacing current suppliers and bringing intellectual property within the exchange group, according to David Lester, director of Information and Technology at the LSE. “We look forward to introducing their proven trading platform before the end of 2010, which will provide our clients with sub-millisecond trading latencies and give the group a very fast, multi-product, cost-efficient, scalable trading platform,” he said. “The transition will be carefully managed, with further enhancements to TradElect planned in the interim.”
The LSE has offered to acquire 100% of MillenniumIT’s shares for cash consideration with a share alternative. It is estimated that 73% of the total deal consideration will be paid in cash, with the rest in new LSE Group shares to be issued, estimated at around 600,000 shares. The transaction is expected to complete by mid-October 2009.