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A-Team Insight Blogs

Ion Trading Acquires Twice to Add Strength in Treasury Risk Management

Ion Trading is back on the acquisition trail, this time building strength in treasury management systems through last week’s takeover of Horsham, Pennsylvania-based Financial Software Systems and the acquisition the previous week of London-based IT2 Treasury Solutions, through subsidiary Wall Street Systems.

A dark horse in capital markets, Dublin-headquartered Ion Trading has quietly developed a substantial privately held business in the derivatives trading market through both organic and acquisitive growth. Its newly acquired treasury specialists add to a portfolio supporting the electronic trading lifecycle from position management and pricing to risk management and downstream processing.

Financial Software Systems was founded in 1992 with a focus on treasury and capital markets systems. Its Spectrum product portfolio covers portfolio management for foreign exchange (FX), money market, interest rate, fixed income and equity instruments, while Spectrum Treasury manages FX, fixed income, equity and derivatives contracts. The company has a worldwide client base of banks, broker-dealers and fund managers and is likely to be moving wholesale into the Ion Group, with founders Gerald Thurston and Vincent Small working to integrate the company.

Commenting on the acquisition, Thurston, who is president of Financial Software Systems, says: “We are pleased with the customer portfolio and global footprint we have built over the past two decades. Ion Group provides a unique opportunity to join a larger organisation with significant technology and domain expertise. We believe the combination with Ion Group will significantly enhance Financial Software Systems’ ability to serve our clients worldwide.”

Wall Street Systems’ acquisition of IT2 Treasury Solutions from private equity fund manger CapMan adds another established treasury management software and services provider to the Ion group. CapMan invested in IT2 in July 2007 and the company has since achieved a compound annual growth rate of 17%. CapMan chairman, Tommy Valther Hansen, says: “IT2 was a very successful investment for the CapMan Technology 2007 funds and we are please to have had the opportunity to develop the company into a significant treasury management service provider. We invested in IT2 primarily because of the company’s competitive product, strong reputation and international growth opportunities. The business has developed even faster than we initially expected, especially in the US.”

While Ion maintains a low profile – or perhaps no profile – when it comes to talking about acquisitions and the business, on past performance it is probably safe to assume that all of IT2, in terms of products and staff, will become part of the group. In a statement about the sale of the company to Wall Street, IT2 CEO Kevin Grant, says: “The company’s prospects to continue its successful operations as part of a larger group remain excellent.”

IT2 has a long history in treasury management harking back to the early 1980s when a group of treasury consultants realised the advent of personal computers made technology affordable for tasks such as FX contract valuations. The group incorporated as Swallow Business Systems in 1982 and then sold out to Bank of America in 1985 where its system was renamed International Treasurer and then IT2. In 1999, Simcorp bought IT2 and broadened the company’s technology before handing the baton to CapMan in 2007.

It will take time for Ion’s intent with regard to Financial Software Systems and IT2 to emerge in the market, but the acquisitions will extend the company’s treasury offerings, as well as its FX expertise and, no doubt, its employee and customer numbers. The acquisitions were not flagged in the market, but they are not a great surprise given Ion’s track record and determination to build without distraction.

The company closed the acquisition of Patsystems in February 2012, adding a provider of electronic trading and exchange systems for derivatives markets, as well as risk management tools and market connectivity solutions. As well as the product set, Ion, which already held 29.7% of the company, took on about 250 staff and 150 customers.

Previous to Patsystems, Ion acquired Wall Street Systems and its 700 employees in May 2011. This took it into the FX market with post-trade functionality and provided an entrance into Wall Street Systems’ prime central bank client base of 24 banks using the Wall Street Suite of performance management, risk, compliance and operations management. Wall Street also delivered a post-trade electronic settlement network.

Earlier acquisitions include the 2006 purchase of Anvil software, which extended product coverage to repo trading and securities lending. And, in July 2008, Ion acquired Rolfe & Nolan, a provider of front-to-back office solutions for exchange-traded derivatives.

As Ion continues down the acquisition trail will FfastFill, which is already 24.99% owned by Ion and provides software as a service to the derivatives market, be the next target in its sights?

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