ICE ramps up move on corporate bond market

US exchanges operator, Intercontinental Exchange, to buy fixed income trading platform BondPoint from Virtu Financial in $400m deal.

Source: Financial Times

Intercontinental Exchange, the US exchanges operator, has underscored its designs on the corporate bond market by agreeing to buy fixed income trading platform BondPoint from Virtu Financial for $400m in cash.

ICE beat competition from other established venues including Tradeweb and MarketAxess, the largest corporate bond trading platform in the US, according to people familiar with the bidding process.

It comes as trading in fixed income markets is increasingly being carried out electronically, with a host of established platform providers vying with upstart venues.

BondPoint, which focuses mainly on retail investors who trade corporate and municipal bonds, will complement ICE’s credit derivatives platform CreditEx, according to analysts. It will also fit with ICE’s acquisition of Interactive Data in 2015, which provides credit market information to investors.

“They have a strong franchise in credit derivatives. They have invested in credit data. It makes sense that they would buy an asset that furthers corporate bond trading as well,” said Kevin McPartland, head of market structure research as Greenwich Associates. “It completely makes sense.”

It also sets up the potential for ICE to go head-to-head with MarketAxess in more institutional client-to-dealer trading, said analysts at Raymond James.

Jeffrey Sprecher, chairman and chief executive at ICE, said: “We believe adding BondPoint’s capabilities to our data and technology infrastructure will allow us to continue to innovate for our customers as the fixed income markets evolve.”

Virtu acquired BondPoint as part of its takeover of KCG Holdings this year but quickly moved to offload the platform as it seeks to streamline the business. A spokesperson for Virtu said that the sale is on top of the target of $250m in cost savings being sought from the KCG merger.

The deal is expected to close in the first quarter of 2018. Virtu said that it would use the proceeds to pay back part of an outstanding loan from the KCG acquisition.

“After a thorough analysis, we concluded that BondPoint is a unique asset better suited to operate outside of Virtu’s core operations,” said Douglas Cifu, Virtu chief executive.