Icap has continued its push into the electronic trading industry with the $247 million purchase of post-trade processing solution provider Traiana, and into the bargain ensured it has an established position from which to reach into the post-trade processing business.
Traiana provides global banks, broker/dealers, buy-side firms and e-trading platforms with solutions to automate post trade processing of financial transactions. Its Harmony network is used by over 50 banks. Its business model is driven by the growth in the number of trades as each trade triggers multiple post trade events and Traiana charges for each event. Icap says that Traiana has been very successful in operating as a neutral platform in the foreign exchange market and enjoys a great partnership with all the market participants, including Icap’s own EBS system.
Icap is clearly seeking to exploit the expected continued expansion of electronic trading volumes. In recent months, several institutions have experienced challenging processing conditions as the volume of FX trades has multiplied dramatically since the volatility spike. The growth of algorithmic trading has also led to a surge in the number of tickets processed in an average day. Icap says it is estimated that there are 500 million transactions annually in the OTC markets, which cost $5 billion to process. Improving the efficiency of the whole process allows volumes to increase whilst removing risk and reducing costs to all market participants.
Michael Spencer, group chief executive of Icap, says: “We are very pleased to have reached agreement to acquire Traiana, the established market leader in the automation of post trade processes in the OTC markets. Post trade services is an area where technology innovation is creating exciting new business opportunities for Icap and is an increasingly competitive necessity in growing market share in our broking business. More efficient post trade processing increases the velocity of trading in our markets and facilitates the adoption of electronic trading. Traiana has shown very significant growth and we now expect this growth to accelerate further, driven by a large increase in the number and size of both momentum and macro players and algorithmic trading in the OTC markets, especially foreign exchange. There are significant further opportunities to expand and additional OTC products are being launched on the network.”
Gil Mandelzis, Traiana’s CEO, adds; "Traiana and Icap share a vision of providing comprehensive exchange-like post-trade services to the OTC markets. By becoming part of Icap, Traiana will be better able to serve our existing clients and platform partners and to more rapidly expand the range of post-trade services we provide. By working together we will give our clients and the ability to grow even faster and to provide a higher level of service to their clients.”
Following the acquisition, the senior management and founders of Traiana, including Mandelzis, will remain with the business within the Icap Group. Mandelzis will report to Mark Yallop, group chief operating officer of Icap.