Technology has rendered the financial world more democratic, so that, nowadays, not only the rich are able to give online orders to purchase or sell financial instruments and foreign currencies, from the comfort of their home, but anyone willing to diversify their investments. The interest for online trading is rising and a visible effect is the trend to consolidate this segment, through acquisitions and mergers.
The online trading market is a rather fragmented one, being populated by hundreds of smaller or larger companies. The fact that this financial sector aims at becoming more clearly defined and at being more solid, at the same time, is proven by the acquisitions that have taken place recently, between companies that have differentiated themselves from others through the number of traders/clients.
For example, Playtech has recently expanded to the online financial trading market by purchasing the Plus500 group, company listed on the London Stock Exchange, for which it offered almost 460 pounds, in cash.
As a matter of fact, Playtech has also done two major purchases, in addition to Plus500, namely it acquired Markets.com and AvaTrade, all elite brokers on the online trading global market, being worth, jointly, 1.5 billion dollars.
Following these acquisitions, a big player on this market will be formed and, if it will be listed on the capital market, it could be worth 4 billion dollars.
Not only did PlayTech make acquisitions, recently, also informing that it is willing to spend 100 million euro for acquisitions, in the future, but other large players have also made important moves.
In April 2015, FinFX was purchased by BCFX Broker, and the reason was that of ensuring to the clients the possibility to make transactions through an officially regulated entity.
“We will certainly hear more about acquisitions or mergers on the online trading market”, states Octavian Constantin Patrascu, business developer in the industry. “The investment framework given by Forex is being formed and it is more and more considered when diversifying the portfolios, and the large acquisitions on the online trading market are an important step towards the maturing and settlement of this market”, adds Octavian Constantin Patrascu.
At the beginning of this year, Gain Capital announced the completion of City Index acquisition transaction for approximately 148 million dollars. The purchase has led to creating a world leader on the online trading market, and this company will have over 1.1 billion dollars in client assets, with annual trading volumes of over 3 trillion dollars.
In January 2015, BATS Global Markets Inc has made a major step on the online trading market, for diversifying the portfolio, through the purchase of Hotspot FX, for 365 million dollars, in cash, from KCG Holding Inc.
Since the foreign exchange market at world level was estimated, in 2013, from the view point of average daily transactions, to amount to 5.3 trillion dollars, according to the data of the Bank for International Regulations, BATS has shifted towards this segment.
“The foreign currencies are very liquid, they are traded 24 hours a day and they have an average annual growth rate of 11% per year”, stated Chris Concannon, BATS president, at the beginning of this year, in an interview for the Wall Street Journal.
Another recent transaction, from June, is the acquisition by Fidelisco of the 365Trading.com website, operating under the regulatory authority in Cyprus.
In the autumn of 2014, FXCM has purchased the client portfolio of the popular platform MT4 from IBFX, and in 2013 Swissquote has purchased MIG Bank, within its strategy of expansion and gaining, in the future, an international presence.
“The biggest advantage of consolidating the online trading market is the very fact that, this way, anyone has access to it, without middlemen and without hidden management fees”, states Octavian Constantin Patrascu. For the players on this market, the acquisitions that are taking place are the sign of a stronger competition, against which only the best will be visible.
This article was published in Wall-street by Octavian Constantin Patrascu