MarketAxess is set to bolster its post-trade and market data services after confirming plans to acquire the regulatory reporting business from exchange operator Deutsche Börse.
The fixed income trading platform provider has entered into an agreement to purchase the German exchange’s reporting business, and it will be acquired through the MarketAxess Trax subsidiary based in the Netherlands. Terms of the transaction were not disclosed.
Deutsche Börse said earlier this year that it was looking at options to offload its reporting hub, including its approved reporting mechanism (ARM) and approved publication arrangement (APA). It also includes trade and transaction reporting, best execution reporting and systematic internaliser (SI) services.
US exchange group CME had confirmed just prior to Deutsche Börse that it is shutting down its regulatory reporting businesses, European and Australian trade repositories by 30 November this year. More than a thousand of CME’s clients are now transferring data and overhauling reporting processes in response to the move.
In response to the deal, compliance technology provider Cappitech warned in a statement that with the number of market players reduced, the inevitable effect will be reduced competition in the short to medium term. With less competition, pricing for trade reporting will likely continue to increase and market participants “may need to assess options for keeping costs as low as possible”, the vendor added.
“We hope that trade and transaction reporting pricing will not see increased pressure as a result of this further market consolidation and the reality of only two significant players offering MiFID trade reporting services,” Ronen Kertis, CEO of Cappitech told The TRADE. “Market participants will need to focus on ensuring accuracy and efficiency in an effort to keep costs down through the use of, for example, single platforms for all reg reporting.”
MarketAxess already operates an ARM an APA for MiFID II reporting, as well as reporting services for various other regulatory regimes such as EMIR, SFTR and CSDR.
The acquisition will expand MarketAxess’ pre- and post-trade data services, as well as its post-trade reporting division. It will also expand its European client base in Germany, France and the Nordics, the company stated.
“With this acquisition, we’re strengthening both our global post-trade and data businesses in two important ways: significantly extending our European client footprint, and increasing our ability to bring new, innovative technologies and solutions to a critical and complex part of the trade lifecycle,” added Christophe Roupie, head of EMEA and APAC at MarketAxess.
The transaction marks the latest acquisition for MarketAxess after the firm said earlier this month that it had entered into an agreement to acquire central electronic venue for interdealer brokers and dealers, MuniBrokers. The deal aims to expand the municipal bond trading business at MarketAxess.
Similarly, In November, the fixed income trading firm closed its $150 million acquisition of US treasuries trading marketplace LiquidityEdge. The deal saw MarketAxess enter the US treasury market for the first time, competing with the likes of Tradeweb and CME Group.