Articles tagged by Euronext
European exchange group Euronext has become the latest to buy into the OTC FX market, announcing it has acquired around 90% of FastMatch for $153 million initial cash consideration. FastMatch’s management will remain invested with around a10% interest, with minority rights. Closing is subject to regulatory and anti-trust approvals, and is expected to occur in Q3 2017.
Euronext says the deal is part of its strategy to actively leverage its balance sheet to capture value accretive opportunities and to accelerate growth and diversification of our revenue base in line with its strategic plan ambitions.
As reported earlier, European exchange group Euronext is buying a majority stake in FX ECN FastMatch. Not only is this a deal that has long been rumoured (only the identity of the buyer was unknown) it also appears to be a deal that makes a great deal of sense.
Euronext is buying a 90% stake in an FX ECN that is seeing tremendous volume growth – the first four months of 2017 have seen average daily volume of $18.1 billion compared to $11 billion the same time in 2016 – and FastMatch is gaining access to a potentially huge distribution network.
LCH has signed binding terms with Euronext NV (Euronext) for the continued provision of clearing services for listed financial and commodity derivatives with LCH SA, the Group’s continental European operating subsidiary.
The agreement, which is expected to be finalised in Q4 2017, covers the clearing of financial derivatives and commodity derivatives for a period of 10 years.
Under the terms of the agreement, LCH SA and Euronext will also work together to achieve a targeted range of reduction in clearing fees of 5% to 15% with effect from January 2019, depending on each specific product and service. The precise quantum of the reduction for allocation to each derivative product line will be refined in consultation with customers.
Euronext has completed the acquisition of 90% of FastMatch, after having received regulatory and anti-trust approvals.
This follows the announcement of 23 May 2017 on the signing of the agreement with the existing shareholders of FastMatch.
In a release issued today, Euronext says that the acquisition is part of its “Agility for Growth” strategy, and that it will diversify Euronext’s top line, accelerate its growth profile and allow the group to extend its “best execution” value proposition to an additional asset class.
FastMatch has launched a consolidated tape for FX in a bid to bring more transparency to the market.
Speaking exclusively to Profit & Loss about the new venture, FastMatch CEO, Dmitri Galinov, explains that any type of FX market participant is welcome to contribute to the new tape, subject to certain stipulations.
The first such condition is that there is a minimum requirement of $2 billion per day in notional volume for those wishing to contribute to the tape. Contributors must also sign a contract with FastMatch confirming that they own the rights to the trades that they are submitting to the tape and agreeing to independent audits of the trades being submitted.
Following the launch of the consolidated tape in September, Dmitri Galinov, CEO of FastMatch, is envisaging a new business model whereby the platform will not charge firms at all for brokerage.
Looking ahead in 2018 Galinov explains that the focus for FastMatch is going to be on expanding its market data business, which he predicts could grow large enough that it will be unnecessary to charge market participants a brokerage fee for trading on the FastMatch platform.
The analogous business model to this, according to Galinov, is Facebook.
FastMatch has generated €7.2 million in revenues for Euronext since the exchange operator acquired 90% of the OTC FX platform in August 2017, according to its full-year 2017 results.
As part of that deal, $46.7 million was paid to FXCM on closing for its stake in FastMatch, with $8.7 million held in escrow subject to certain potential future adjustments.
In addition, it was agreed that FXCM would receive share of a $10 million earnout if certain performance targets of FastMatch are met, although these targets have not been disclosed.
Gil Mandelzis, CEO and founder of Capitolis, has been appointed as a non-executive director of Euronext US.
Stéphane Boujnah, CEO and chairman of the managing board of Euronext, says: “The experience of Gil Mandelzis, our new non-executive director of Euronext US Inc., will be a major asset for our group. As a successful serial entrepreneur in the field of capital markets platforms, Gil will further strengthen our positioning in the United States and our ambition to diversify the revenues of Euronext over the coming years”.
Mandelzis comments: “Euronext is ideally positioned to grow and play a role in the future development of both US and European markets. The pace of change in market structure and as well as new technology and trading solutions has accelerated and I look forward to supporting Stéphane and the Euronext team in leading the market through these changes”.
If there’s one thing that has become abundantly clear over the past few years, it is that many OTC platforms have decided that they need to scale their businesses up and out in order to be successful in today’s FX market.
This was made abundantly clear in a press call today when Terry Duffy and Michael Spencer, respectively the CEOs of CME Group and NEX Group, talked about the logic behind their $5.4 billion tie-up.
“Effectively, what we’re building is a bigger supermarket,” said Spencer. “Why do people shop in supermarkets? Because it’s convenient to buy everything in one place.”
Dmitri Galinov, CEO of Fastmatch, has left the firm. Fastmatch was bought by exchange group Euronext one year ago.
Kevin Wolf, head of FICC for the US, has assumed responsibility for Fastmatch. Wolf will report to Paul Humphries, global head of FICC at the exchange group. Wolf joined Euronext in August 2017 after a short spell as principal at Viable Markets, prior to which he spent six years at Eris Exchange, most latterly as chief business and product development officer.
The Supervisory Board of Euronext has unanimously approved the appointment of Chris Topple as CEO of Euronext London, head of global sales and a member of the Managing Board of Euronext, subject to all relevant shareholder and regulatory approval.
Topple, who worked extensively in brokerage and clearing services throughout his career, will oversee sales across all asset classes. He will take up his new role based in London on 15 October 2018. Paul Humphrey, current interim CEO of Euronext London and head of global sales, will remain in his current role as global head of FICC.
Dmitri Galinov, founder and former CEO of FastMatch, has announced that he has filed a lawsuit in the US District Court for the Southern District of New York against FastMatch and Euronext US for the unlawful termination of his employment.
Galinov left Fastmatch just over one year after Euronext acquired a 90% stake in the company, his departure was seen by many at the time as surprising.
The lawsuit asserts that Galinov was fired in June 2018 “improperly, unceremoniously, and under false pretense” as part of “a Machiavellian scheme”.
Paul Humphrey, global head of FICC at Euronext, is leaving the firm to pursue other opportunities a spokesperson for the exchange confirms. He has been at Euronext for three years and was responsible for building and managing the FICC business and led the group’s purchase of a majority stake in FX platform Fastmatch.
Chris Topple, CEO of Euronext London, has been named to head the FICC business going forward.
Humphrey has more than 25 years experience in the FICC industry.
FastMatch and Dmitri Galinov, the founder and former CEO of the company, have resolved the lawsuit filed by Galinov against FastMatch and its parent company, Euronext US.Under the terms of the settlement, neither party admits any liability or wrongdoing.“The settlement is in the best interests of the company, its employees and clients,” says a release announcing the agreement.Galinov left the company on 6 June, 2018 and is “pursuing other interests”, according to the release.Profit & Loss was unable to immediately contact a spokesperson for Euronext, while a spokesperson for Galinov says that as part of the settlement agreement both parties are unable to comment on the terms of the agreement.
In recent years, large exchange groups have been lining up to buy OTC FX platforms. But in this game of musical chairs, what happens to the venues without a buyer when the music stops? Galen Stops reports.One of the major trends in the multi-dealer platform space in recent years has been the acquisition of these platforms by larger exchange groups. Hotspot was the first to go after it was bought by BATS Global Markets in 2015, which in turn was then acquired by Cboe Global Markets in 2017 and the FX platform was rebranded as CboeFX.
In 2016 Fastmatch saw year-on-year average daily volumes (ADV) on its platform grow by 54%, and no doubt this growth was at least partially responsible for Euronext’s decision to spend $153 million to purchase 90% of the platform in August 2017, as it subsequently registered a 44% increase in ADV for that year. 2018 saw strong, if not as spectacular, year-on-year ADV growth of 9% to $20.1 billion, but Kevin Wolf, CEO of FastMatch and head of FICC US at Euronext, instead highlights the increase in the number of clients using the platform as the key growth metric for the year. “When we think about client acquisitions, we break it down along two dimensions: one is the number of clients and the other is the diversity of clients,” he explains.