Today's announcement that KCG sold Hotspot is not a surprise to Aite Group, since the GETCO management had explicitly stated at the time of their Knight acquisition that Hotspot would eventually be sold.
"BATS has done a good job in promoting electronic trading of cash equities, rather than listed equity options. So one would expect given the support this exchange receives from a core group of highly sophisticated electronic market makers and proprietary trading firms, they should succeed in promoting further electronification of spot FX markets going forward via the Hotspot trading venue," says Howard Tai, senior analyst in Institutional Securities & Investments at Aite Group. "However, the question is now whether BATS will retain the bulk of the current Hotspot management team post acquisition, and whether they keep the main center of FX operation out of Jersey City, or move them over to Lenexa, Kansas where BATS’ headquarters is located?"
"In the big scheme of things, what this transaction does is invite further M&A activity with exchanges going shopping for the larger or most promising OTC eFX venues. The latter now have a nice exit strategy at attractive valuations, and may also look at an acquisition as way to grow the business by partnering with the right exchange," says Javier Paz, senior analyst in Wealth Management at Aite Group.
FTSE Mondo Visione Exchanges Index:
Commentary From Aite Group On BATS Global Markets Agreeing To Acquire The Hotspot FX Market
Date 28/01/2015