Yesterday’s announcement that Thomson Reuters are buying FXall has as expected, generated lots of blog activity about the rationale for such a deal.
The handy LeapRate chart below, shows how the combination of Reuters + FXall would create a dominant player in terms of daily FX vols ($blns).
Chart Source: LeapRate
However,when you look more closely at the core segments each platform serves, it’s not the same picture.
Thomson Reuters has historically been strongest in the interbank market, with their ECN Thomson Reuters Matching, although volume figures released and covered by EuroMoneyFXNews show a 7% decline to falling to $140bln/day.
Whereas, FXall’s strength by contrast are their workflow solutions for buy side firms like Asset managers, and as the chart below from Client Knowledge shows, FXall has three times the footprint with buyside firms than Reuters.
As mentioned previously, Bloomberg’s FXGO offering is starting to gain some real traction with buyside firms (although from a much lower base level), and given Bloomberg’s traditional strength in workflow solutions, and footprint in buyside firms, Reuters needed to do something to prevent themselves from being marginalised within the buyside.
So, whilst undoubtedly a catch for Reuters, it does nonetheless seem like a defensive move. Although, like all of Reuters acquisitions, lets see how they manage the integration, and most importantly, who with real vision, will end up running the combined FX businesses.
Chart Source: Client Knowledge