CME Group has reached agreement to acquire London-based interdealer broker NEX Group in a deal valued at £3.8 billion. The deal is expected to close in the second half of 2018 and will bring together two trading industry giants with the ambition to deliver better ways to trade and manage risk across futures, cash and OTC products. CME Group runs a derivatives marketplace in Chicago and owns the Dow Jones Indexes, while NEX runs markets for trading currencies and treasuries.
Terry Duffy, CME Group chairman and CEO, says: “At a time when market participants are seeking ways to lower trading costs and manage risk more effectively, this acquisition will allow us to create significant value and efficiencies for our clients globally. As one organisation, we will be able to employ the complementary strengths of each company to serve a wider client base while diversifying our combined businesses across futures, cash and OTC products and post-trade services.
“We are committed to maintaining the longstanding relationships NEX has with its clients, and exchange and clearing house partners. Building on NEX’s deep roots in Europe and Asia and CME’s strong technology platform, we will transform our international profile and broaden our distribution network in spot and futures FX products as well as cash, repo and futures products in US Treasuries.”
NEX CEO Michael Spencer, who founded the business formerly known as ICAP in 1986, says the combination of NEX and CME will be an ‘industry-changing transaction’. He explains: “Bringing together cash and futures products and OTC services will be unique, offering clients improved access to trading, greater financial efficiencies and highly valuable data sets. The technology and innovation opportunities will be diverse and extraordinary. Clients will be better served.”
After the acquisition is complete, Spencer will join the CME Group board of directors and will act as a special adviser working to drive the integration and evolution of the NEX businesses. He notes that CME’s decision to choose London as its European headquarters is ‘a signal of tremendous support for Britain’s financial services sector’.
Considering the potential of the proposed single company, CME and NEX say that combining NEX’s leading electronic FX and fixed income cash execution platforms with CME Group will improve trading technology and streamline access by reducing the number of touchpoints that clients need to trade across products. In addition, NEX’s OTC post-trade products and services complement CME Group’s derivatives clearing services. Combining these solutions will strengthen the NEX compression, reconciliation and processing businesses. The combination will also facilitate the development of innovative post-trade services and data offerings to enhance cost-effective trading and risk management.