CME shares rise amid plans to buy UK digital trading exchange, NEX

CME shares rise amid plans to buy UK digital trading exchange, NEX
Written by:
Ilona Billington
March 30, 2018

CME shares closed higher in the US Thursday, as the exchanges group announced plans to purchase UK-based foreign exchange and fixed income trading business, NEX PLC, for $5.5 billion. The US firm has offered 500 pence per share for the UK firm, formerly known as ICAP.

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CME shares ended 1.83% higher at $161.74. NEX shares, meanwhile, ended the UK Thursday trading session 0.93% in the green at £981.00.

Digital trading tie-up

CME’s bid for NEX is intended to “create a leading, client-centric, global markets company that will deliver better ways to trade and manage risk across futures, cash and OTC products,” CME said in a press release on the plan.

“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 CME Group Chairman and CEO Terry Duffy.

“As one organization, we will be able to employ the complementary strengths of each company to serve a wider client base while diversifying our combined businesses across futures, cash and OTC products and post-trade services,” Duffy added.

Meanwhile, NEX is equally upbeat on the deal.

“The combination of NEX and CME will be an industry-changing transaction,” said NEX CEO Michael Spencer. “Bringing together cash and futures products and OTC services will be unique, offering clients improved access to trading, greater financial efficiencies and highly valuable data sets.”

CME chooses London for new EU company HQ

The deal could net NEX CEO Spencer some £670 million. In addition, Spencer stated that CME had opted for London as the new EU headquarters for the combined business.

Other details of the proposed deal include:

  • The proposal has been unanimously approved by both boards.
  • Tie-up to produce some $200 million cost savings by the end of 2021.
  • The deal is expected to close in the second half of 2018.