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NEX Group In CME’s Sights

NEX Group has issued a statement confirming that it has received a preliminary approach from CME Group to acquire the company.

The firm says discussions are at an early stage and there can be no certainty that an offer will be made, or one is, its terms.

Under UK rules, CME has until close of business on April 12 to confirm a bid or announce it does not intend to proceed, however this can be extended upon application.

This publication has previously predicted such a move, however, sources familiar with the matter say this may not be the end of the story and that a competing bid could emerge for NEX, which is valued at around £2.5 billion. CME’s rival ICE could also be interested in the company as exchange groups continue to look at buying into the OTC market, not only because customers seem to prefer trading OTC, but also to help boost the exchange’s clearing business.

NEX handled a daily average of $82.7 billion in spot FX in 2017 (volume has increased from that level in early 2018), as well as $228.8 billion per day in US repo products, $225.8 in European repo and $160.7 billion in US Treasuries. Although the firm’s FX volumes have declined from their peak between 2008 and 2010, NEX remains one of the biggest players in the market.

Speculation of a bid for NEX really started the day it was spun out of Icap, the inter-dealer broking firm that was split into electronic trading and processing and voice broking, with the latter moving under the Tullett Prebon umbrella as TP Icap. In the OTC FX market many of NEX’ rivals are under exchange ownership, such as HotspotFX (now CboeFX), 360T (Deutsche Bourse) and FastmatchFX (Euronext).

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Colin Lambert

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