About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Euroclear Agrees to Buy Xtrakter Off ICMA as Part of Drive to Broaden Trade Matching Service Offering

Subscribe to our newsletter

Originally appeared in MiFID Monitor

Euroclear has continued on the acquisition trail this month by signing an agreement with the International Capital Market Association (ICMA) whereby Euroclear will acquire 100% of Xtrakter, the ICMA subsidiary, for an undisclosed cash amount. Ignace Combes, deputy CEO of Euroclear, explains that the acquisition is part of the firm’s drive to broaden its trade matching service offering with more asset classes and extended life cycle management.

Following the transaction, Xtrakter, which owns trade matching and regulatory reporting system TRAX, will become a wholly owned subsidiary of Euroclear. It will also become a sister company to the Euroclear group’s growing number of international and national central securities depositories (CSDs) and EMXCo.

“Euroclear is primarily interested in bringing STP and greater benefits to clients by streamlining post-trade processing further upstream and, as a result, reduce related operational costs and risks,” explains Combes. “The acquisition of Xtrakter also allows Euroclear to broaden its trade matching service offering with more asset classes and extended life cycle management. With Xtrakter, Euroclear will also be able to offer a more comprehensive and price competitive transaction reporting service to clients.”

Euroclear already provides transaction reporting, via Euroclear UK & Ireland, and OTC trade matching services, via ETCMS at Euroclear Bank.

Combes says that ICMA decided to dispose of the Xtrakter business following extensive discussions with and based on the unequivocal support from its committee of regional representatives. ICMA’s board then unanimously decided to propose the move to its members at its annual general meeting (AGM) in May 2008. Accordingly, the ICMA board’s proposal was approved by a vast majority of members at the AGM.

“Euroclear (and others) began serious discussions with ICMA about the purchase of Xtrakter around the time of the AGM,” says Combes.

ICMA took the decision to divest itself of its market services business because it felt the move would enable it to better focus on its core activities as a trade association, representing members’ interests and as a self-regulator of the international capital market, says Combes.

Moreover, as a result of the disposal, the funding of ICMA’s activities as a trade association and self-regulator would no longer depend on market services business activities but, rather, be exclusively based on members’ fees and contributions and therefore become fully transparent. The disposal of Xtrakter would also remove any perceived potential conflicts of interest between ICMA’s regulatory policy activities on the one hand and the market services business activities on the other.

René Karsenti, executive president of ICMA, adds: “When the association launched TRAX 20 years ago, it was in response to the clear industry need for a market-wide trade matching system. The acquisition of Xtrakter by Euroclear will allow Xtrakter to develop and enhance its market led services in the context of the many advantages and synergies available from operating as part of a group providing world class settlement and related services.”

Following the completion of the deal, which is currently pending regulatory approval, Combes indicates that Xtrakter will continue to offer its core services, including trade matching, MiFID compliant transaction reporting as well as information services (pricing and reference data). “By the end of 2009, Euroclear and Xtrakter intend to automate the flow of trade information, from trade matching at Xtrakter through to settlement at Euroclear, thereby eliminating matching duplication, reducing settlement fails, costs and risks,” he elaborates.

Kevin Milne, CEO of Xtrakter, adds: “Under our new ownership, we will maintain our strategy of delivering ongoing improved client services across all our business lines. Being part of Euroclear will enable us to drive our matching, reporting and information services products into new areas, thereby helping to support our customers reduce further their operational cost of trading.”

Combes claims that by combining the pre-settlement services and expertise of Xtrakter with Euroclear’s transaction settlement capabilities, the deal will deliver to the market a full STP service from trade matching to settlement. “The benefits of streamlining processes and eliminating matching duplication at trade and settlement level will be measured through increased efficiency and lower back office costs for clients,” he adds. “In addition, mandatory regulatory (under MiFID) reporting of transaction information can be provided seamlessly in the UK, France and the Netherlands as a result of the combined businesses.”

Euroclear expects to obtain all regulatory approvals in the first quarter 2009 and, working closely with its mutual clients, to provide the automated flow of trade information from Xtrakter to Euroclear by the end of 2009, says Combes. “We believe this acquisition will give Euroclear a competitive edge by being able to extend STP further upstream, from trade matching through to settlement, for a broader range of client transactions,” he concludes.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: How to gain operational efficiency in corporate actions processing

While the risk associated with corporate actions is well established, many financial institutions continue with manual processing in the back office. More often than not, corporate actions information is manually keyed in and event processing lacks automation. This results in operational inefficiency, and financial risk due to missed events or simply getting it wrong. These...

BLOG

S&P Global Dataset Aligns MiFID II and SFDR Sustainability Reporting Requirements

S&P Global launches SFDR Sustainable Investment Framework dataset via Xpressfeed and Snowflake. The dataset enables market participants to align reporting with MiFID II and SFDR requirements when incorporating sustainability considerations into investment decisions. S&P Global Sustainable1, S&P Global’s central source for sustainability intelligence, has released a dataset that enables financial markets participants to better align...

EVENT

TradingTech Summit London

Now in its 13th year the TradingTech Summit London brings together the European trading technology capital markets industry and examines the latest changes and innovations in trading technology and explores how technology is being deployed to create an edge in sell side and buy side capital markets financial institutions.

GUIDE

Regulatory Data Handbook 2023 – Eleventh Edition

Welcome to the eleventh edition of A-Team Group’s Regulatory Data Handbook, a popular publication that covers new regulations in capital markets, tracks regulatory change, and provides advice on the data, data management and implementation requirements of more than 30 regulations across UK, European, US and Asia-Pacific capital markets. This edition of the handbook includes new...