A stream of merger and acquisition announcements has become the norm in recent months, as institutions from all corners of the market turn to deals for consolidation and expansion.
This week, the industry’s eyes turned to trading venues as two new M&A announcements were made.
Trading venues, in particular, have viewed consolidation as a method to expand their offerings, allowing them to become a one-stop-shop for their clients.
On Monday 7 August, Aquis Exchange announced plans to expand its block crossing remit with a minority stake in US-based equities block trading start-up OptimX.
The deal was completed as part of a consortium, including DB1 Ventures, the venture capital arm of Deutche Börse Group.
The terms of the acquisition show that the investment has been split into two tranches, payable in cash. The first tranche will see Aquis subscribe $750,000 out of a total first tranche of $3 million.
The second tranche, which is due to take place in a year’s time, will include a further $750,000 out of a total $3 million.
The deal teed Aquis up for its planned expansion into block trading, with plans to add conditional order types in the fourth quarter.
“This has been something in the making for quite a while. It’s part of Aquis’ developed strategy. We added the dark pool last year, then we added the dark lit order sweep. This is the next step, putting conditionals in, because clients want that capability,” Clelland told The TRADE.
Also announced this week was MarketAxess’ plans to acquire multi-asset algorithmic trading provider, Pragma, for an undisclosed sum at the end of this year, subject to closing conditions.
Pragma is an algorithmic trading and analytical services provider across equities, foreign exchange and fixed income. The firm’s clients include asset managers, hedge funds, broker dealers, banks and exchanges.
According to Pragma, its algorithmic trading platform has handled more than $2 trillion of client algorithmic order flow in various asset classes across 50 venues in 2022.
“Our acquisition of Pragma underscores MarketAxess’ commitment to innovating, integrating, and providing our clients with quantitative, AI-powered technology solutions powered by proprietary data designed to simplify and enhance their workflows,” said Chris Concannon, chief executive officer of MarketAxess.
Aquis Exchange and MarketAxess’ M&A agreements revealed this week follow a string of consolidation efforts seen over the last few months.
Read more: Asset manager consolidation wave continues as two deals announced in 24 hours
Most recently, New York-based prime broker Clear Street announced plans to expand into the futures market with the acquisition of software developer, React Consulting Services, subject to regulatory approval.
React’s proprietary, cloud-native futures clearing platform, BASIS, will be integrated into Clear Street’s existing platform – which currently encompasses cloud-native clearing, settlement, execution and custody. Following the integration, Clear Street’s offering will finance US equities, options, fixed income, and futures.
The integration is set to be phased, beginning with connecting the platform to futures exchanges early next year.
The ongoing flurry of mergers and acquisitions to drive inorganic growth shows no sign of abating, with more announcements expected to be in the pipeline.