Deutsche Börse in talks to buy Refinitiv FX units

Negotiations confirmed, but not whether FXall is on the sale block

Building blocks
Deutsche Börse is expanding its footprint into FX and analytics

Financial markets data and infrastructure provider Refinitiv is in negotiations with Deutsche Börse that could result in some of its foreign exchange business changing hands.

Both companies acknowledged they were in sale talks after Reuters reported that the German stock exchange operator was closing in on a deal to buy Refinitiv’s FXall platform for about $3.5 billion.

“Refinitiv confirms that it is in ongoing discussions with Deutsche Börse which could include the divestiture of certain of its FX products,” the company said in a statement on April 10. It declined to identify which parts of its FX portfolio are involved.

“With regards to current market speculations, Deutsche Börse AG confirms that it is currently in concrete negotiations with Refinitiv group concerning the potential purchase of certain FX business units,” the exchange operator said in a statement.

However, Deutsche Börse rebuffed other reported details about the potential transaction.

“The purchase price of $3.5 billion and the imminent signing of binding contracts mentioned in the market speculations are entirely unfounded,” it said.

In late 2018, Thomson Reuters sold a 55% stake in its Financial & Risk business for $20 billion to a consortium of investors led by private equity firm Blackstone. Thomson Reuters retained 45% of the unit, which was renamed Refinitiv.  The standalone business, which includes the FXall platform as well as FX Trading and Matching, trades an average daily volume of $465 billion as of March 2019.

Since that deal, there has been speculation that Blackstone might decide to divest parts of the Refinitiv businesses. In September, Bloomberg reported that the firm was weighing a sale of FXall, citing unidentified sources. 

“It will be interesting to learn what part of the Refinitiv business – FXall, Matching, Dealing – is on the block, with each of them generating $100 billion or more in FX trading volume,” Javier Paz, founder and managing director of FX consultancy Forex Datasource, tells FX Week

If the new negotiations are successful and do focus on FXall, Deutsche Börse’s move would echo similar pushes by exchanges further into over-the-counter FX trading. In March, SGX snapped up a 20% stake in BidFX, while CME completed its purchase of Nex in late 2018. Before that, Euronext bought FastMatch in 2017, and Cboe owns Cboe FX, the former Hotspot, through its acquisition of Bats in 2017. 

The addition of Refinitiv services could help Deutsche Börse gain a stronger hold in the FX market. The German company already owns 360T, a trading platform with a strong focus on corporates, which it acquired in 2015 for $796 million. In May 2018, 360T expanded its FX trading arm by buying the GTX ECN business from Gain Capital for $100 million.

The combined FX businesses – renamed 360TGTX – created one of the most diverse over-the-counter currency marketplaces, supporting both disclosed and anonymous OTC FX spot, forwards, swaps, non-deliverable forwards and options.

Deutsche Börse’s current FX strengths are that it is the leading European FX multi-dealer platform, its deep pockets, and its multi-asset class trading and clearing, Paz notes.

“If a deal is announced, the market would go from having three large, well-endowed FX marketplace contenders to having four – something that regulators and clients would consider a positive development,” he says.

In a separate move earlier this week, Deutsche Börse announced that it was acquiring Axioma for $820 million. It plans to merge the risk management software provider with its own index business to create a new portfolio/risk analytics business.

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