EBS buys institutional platform Molten Markets


Interesting to see the announcement from EBSBrokerTec, that they are buying Molten Markets, the three-year old FX technology platform for asset managers and pension funds.

According to the PR, the acquisition of Molten Markets will enable EBS BrokerTec to provide asset managers with a sophisticated execution management system and innovative trade cost analysis. Leveraging Molten Markets’ assets and technology, as well as EBS BrokerTec’s extensive distribution network and liquidity provider (LP) relationships, will enable EBS BrokerTec to offer a unique range of solutions to the asset management industry, while at the same time enhancing its offering to its LP customers.

Molten Markets current product suite include:

Stacks Image 455 The InstiFX® trading platform gives Asset Managers everything they need to trade in today’s increasingly automated FX markets.
Stacks Image 471 CustodyFX® is a specific offering structured and priced to meet the needs of custodians and operations outsourcing groups to better automate their execution process and provide a degree of transparency that has not been offered before.
Stacks Image 488 Truly informative TCA comes from capturing vast amounts of data in real-time as a risk position is received, managed, executed and beyond. Molten Markets unique solution solves the essential problem of TCA in OTC markets – the lack of a single market price.

Molten Markets

Molten Markets Client GUI

As part of the acquisition, Simon Wilson-Taylor, current President and CEO of Molten Markets, joins EBS BrokerTec in New York, with immediate effect, to lead this initiative as Head of EBS Institutional FX. Simon has more than 35 years’ experience in financial services and has held key roles within the industry, which included founding and leading Global Link’s FX Connect platform. He has also held senior roles at State Street, HSBC and UBS.

In terms of institutional FX flows, as can be seen from the charts below, the institutional FX market is strong and growing (the orange line in the charts). Based on Bank of International Settlements (BIS) Triennial FX Survey, the institutional market in Apr 13 accounted for 53% of total daily FX volumes, and as can be seen from the orange line, is growing strongly.

BIS Data Daily FX volumesDaily FX volumes by client segment based on Bank of International Settlements (BIS) triennial FX Survey

When looking at the execution method for institutional clients, and as mentioned in previous posts, the MDP is seen as the preferred execution channel when compared to SDP, as the MDPs provide transaction cost analysis (TCA) tools to enable buyside firms to demonstrate their adherence to internal Best Execution (BestEx) policies. This trend is highlighted in the chart below, which shows daily institutional FX volumes based Bank of England Semi Annual FX survey data, and as we can see from the dotted blue line, institutional FX flows via MDPs has been steadily outperforming FX flows via SDPs since about Oct 09. In Apr 2015, the daily volumes of institutional FX via MDP was $183bn/day compared to only $48bn/day via SDPs.

BofE Daily Institutional FX volumesDaily FX volumes for Institutional FX via MDP and SDP based on Bank of England Semi Annual FX Survey Apr 15

 

Gil Mandelzis, CEO, EBS BrokerTec, said:

“The acquisition of Molten Markets marks the culmination of our strategy to offer the complete OTC FX product suite to all institutional customer segments. Over the past three years, we have extended our offering from only a Central Limit Order Book to any model of execution, expanded our product coverage from spot only to any FX instrument, and expanded our customer base to include regional banks, hedge funds, the buy-side and corporates, in addition to our traditional global bank and proprietary trading audience.

Today, we are delighted to extend the EBS BrokerTec offering to a large institutional customer segment that we were not yet serving: asset managers. We are pleased that Simon and his team have agreed to join EBS BrokerTec to lead this effort. Simon’s knowledge will be exceptionally valuable to EBS BrokerTec as we enter the real money space, and we look forward to working with this community for the years to come.”

Justyn Trenner, Global Head of Strategy, EBS BrokerTec, said: “This acquisition will allow us to address a clear and unmet need expressed to us by real money managers – to achieve demonstrable best execution from a single platform that also addresses the unique workflow challenges they face. The team at Molten Markets has developed unique tools to help asset managers make the right trade choices and demonstrate the outcomes to their asset owners.”

Full Press release here

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