BGC sells Trayport to ICE exchange for $650m


Back in Feb 2015, BGC the interdealer broker (IDB), bought rival GFI for $778m. The transaction included GFI’s FX Option platform Fenics as well as commodity and energy platform Trayport. Although Fenics was strategic to the transaction, BGC had talked about selling Trayport.

Today, BGC announced that ICE exchange, who last month bought IDC for $5.2bn, would pay $650m for the Trayport platform.

According to Howard Lutnick, CEO of BGC;

“One of the main reasons that BGC pursued GFI was the expectation that the sale of Trayport would dramatically lower the price and risk involved with respect to purchasing the rest of GFI’s businesses. The proposed sale price represents $650m of the $750m that BGC will pay for all of GFI.

This translates into BGC paying approximately $100m for $640m of GFI’s remaining revenues, or a multiple of just 0.16 times sales. Therefore, we expect the GFI transaction to produce enormous value for BGC’s investors.”

Trayport: generates less than 3% of BGC revenues ($18.9m in Q3/15)
FENICS, generates $60.7m in Q3/15, or $250m of annualized revenues and approximately $105m of annualized pre-tax distributable earnings

So, selling Trayport and keeping Fenics was a no-brainer for BGC!

David Weiss over at Aite group, has a nice blog post that saves me trouble of comparing the two heavyweight IDB groups of Tullett+ICAP’s Global Broking Business vs BGC+GFI.

Full details of the BGC/ICE transaction here

FX Platform consolidation: 360T sold to Deutsche Boerse for €750m (as previously mentioned)


As first mentioned last month, the multi-bank FX platform 360T has now been sold to exchange operator, Deutsche Boerse for €750m ($805m), beating off interest from rival exchange operator CME Group.

360TThe transaction, which was announced today (Sunday), is the latest in a string of recent FX platform transactions, which I guess started with FXall being bought by ThomsonReuters back in 2012, and which may well see FastMatch as the next target, with exchange operator ICE as rumored suitor.

Platform costs based on daily volumes2Table showing relative costs of platforms in terms of (A) $bln daily vol, (B) cost/institutional client

Although not confirmed, I would think CME group was attracted to 360T’s dealer-client franchise. As it played to the client clearing capital efficiency proposition that CME has been developing, helping to facilitate bank-client trading relationships by mitigating counter-party risk, rather than competing for the execution of the transaction.

So, having lost out on 360T, it’s certainly possible that CME may cast an eye over Fastmatch as it would also open new clearing opportunities.