Thomson Reuters has entered an agreement to buy FXall, an electronic multi-bank FX trading platform, as electronic trading in the asset class continues to ramp up.
Under the agreement, Thomson Reuters plans to acquire 100% of the shares of FXall for US$22 per share in cash. The FXall board has recommended that the firm’s shareholders accept the deal, which is expected to close in the third quarter 2012, subject to regulatory approval. FXall currently serves some 1,000 institutional clients from its bases in the US, UK, Switzerland, India, Singapore, Hong Kong, Japan and Australia.
FXall is used by market participants to compare prices for FX transactions across multiple different brokers. Market participants can also decide their method of execution, such as trading via an electronic communications network, a broker or the inter-bank market. The market also supports request for quote (RFQ) functionality and algo trading. The platform provides users with pre-trade indicative calculations, execution of multiple strategies with or without delta exchange, and post-trade functionality for settlement, premium netting and payments.
At the start of this month, FXall added FX options to its trading platform, using Bank of America Merrill Lynch and Credit Suisse as providers of streaming electronic prices. FXall clients can now trade FX options by sending RFQs to multiple banks and deal electronically on the same platform they use for trading other FX instruments.
Thomson Reuters expanded its own FX capabilities earlier this year with the launch of a global analysis and commentary service called FX Buzz. The tool offers real-time FX insight for market participants and has been integrated into Thomson Reuters desktops, Eikon and Reuters 3000 Xtra offerings, allowing traders to act on FX information through a single service.
The addition of FXall to Thomson Reuters’ existing offerings will extend the range of execution options and access to liquidity for customers of both firms.
“FXall will now have a bigger stage from which to drive greater innovation and growth, with access to Thomson Reuters global reach, standing in the FX community and focus on client solutions,” said Phil Weisberg, chairman and CEO, FXall. “The combined platform allows us to deliver greater value to our clients and employees, building upon the foundation that we have established over the past twelve years. In addition, we believe this is a compelling transaction for our shareholders.”
New trading solutions for FX continue to grow, with a number of industry observers noting an increasing move towards greater electronic trading in the asset class. Rebecca Healey, senior analyst at research firm TABB Group, noted that the shift away from the traditional OTC bilateral relationships that characterised FX trading in the past will require increased trading tools and technology such as smart order routers and venue analysis.
"Traders are questioning the prices they receive, demanding improved performance and taking greater ownership of their orders, which in turn is rebuilding the element of trust within the currency markets," said Healey. "FX trading as we know it today is set for radical change. The purchase of FXall by Thomson Reuters is just the beginning."