CME to retire Nex, revives EBS as sub-brand

The deal between the two firms will go ahead after full regulatory approval in all jurisdictions

Hand shake
CME-Nex deal: birth of a giant in OTC and exchange FX, as well as US treasuries and commodities

CME Group has completed the acquisition of Nex, following regulatory approval for the deal to go ahead. The group announced it will retire the Nex brand and bring back EBS as a sub-brand for CME

The UK’s Competition Authority approved the deal on October 31, and courts sanctioned the arrangement on November 1.

CME Group will retire the Nex name and brand, but will continue to operate its individual markets and optimisation businesses as sub-brands, including BrokerTec, EBS, Traiana and TriOptima. Corporate headquarters will remain in Chicago, with London continuing to serve as CME Group’s European headquarters,” CME announced on November 2.

The new owner said it would preserve the existing market structures of the newly acquired Nex businesses, but it would use its technology, futures trading and product development expertise to strengthen and scale these offerings. The combined stable of products will simplify access to electronic FX and fixed-income platforms, delivering new trading opportunities for market participants. 

The amalgamated post-trade division will also strengthen compression, reconciliation and processing capabilities. 

“We are extremely pleased to complete this acquisition and welcome Nex into CME Group,” says CME Group chairman and chief executive officer Terry Duffy. “By combining the strengths of our two leading organisations, CME Group is uniquely positioned to address the changing needs of market participants worldwide. Together, we will provide efficient access to futures, cash and over-the-counter markets, as well as post-trade services and data offerings that will further support cost-effective trading and risk management.”

CME Group will retire the Nex name and brand, but will continue to operate its individual markets and optimisation businesses as sub-brands, including BrokerTec, EBS, Traiana and TriOptima
CME Group 

The CMA’s consent follows approvals received from the Department of Justice in mid-October, and other regulators in Germany, Italy, Sweden, the UK and the US. The required pre-notifications have also been made in Hong Kong.

“Nex and CME are pleased to confirm they have received clearance from the UK Competition and Markets Authority for the acquisition,” the two firms announced in a statement. “Therefore, all of the conditions relating to regulatory and antitrust approvals have now been satisfied or (where capable of waiver) waived.”

Nex shares stopped trading on the London Stock Exchange at 4:30pm on November 1 and new CME shares will be listed on Nasdaq on November 5.

Following press reports at the beginning of March alluding to talks between CME and Nex, the two firms confirmed on March 15 that initial discussions of a potential tie-up were ongoing.

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Michael Spencer

Later that month, CME’s £3.9 billion offer for Nex Group was unanimously approved by the board of directors of each firm, in a move that will see the birth of a giant in spot and futures FX, US treasuries and commodities.

“At a time when market participants are seeking ways to lower trading costs and manage risk more effectively, this acquisition will allow us to create significant value and efficiencies for our clients globally,” said Duffy, after the deal’s board approval in March.

“The combination of Nex and CME will be an industry changing transaction,” Nex chief executive Michael Spencer added. “Bringing together cash and futures products and over-the-counter services will be unique, offering clients improved access to trading, greater financial efficiencies and highly valuable data sets. The technology and innovation opportunities will be diverse and extraordinary. Clients will be better served.”

The agreement between the two firms consists of a 50/50 cash/stock deal, in which CME Group will pay £10 per Nex Group share, valued at 500 pence in cash and 0.0444 CME shares.

London will serve as the European headquarters for the new entity.

Nex chief executive Michael Spencer will join CME Group’s board of directors. He will stay on at the integrated company as a special adviser, and serve as its ambassador in the European, Middle East and Africa region, and Asia.

CME and Nex estimate the combined entity will be able to generate synergies worth $200 million annually by the end of 2021, due to administrative, operational and IT consolidation.

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