SGX expands forex trading reach with $171 million acquisition of MaxxTrader

The acquisition is priced at 8.3 times MaxxTrader’s 2020 revenue and expected to be accretive to earnings from the first year.
The acquisition is priced at 8.3 times MaxxTrader’s 2020 revenue and expected to be accretive to earnings from the first year.PHOTO: ST FILE

SINGAPORE - Singapore Exchange (SGX) is acquiring foreign exchange (FX) trading platform MaxxTrader to expand its reach in the FX space and support its position as Asia's largest FX derivatives exchange.

SGX will acquire MaxxTrader from FlexTrade Systems, a global multi-asset execution and order management systems provider, for US$125 million (S$171 million), it announced before the market opened on Friday (July 23).

The acquisition, which will be funded by external borrowings, is priced at 8.3 times MaxxTrader’s 2020 revenue and is expected to be accretive to earnings from the first year.

Headquartered in Singapore, MaxxTrader provides FX pricing and risk solutions for sell-side institutions including banks and broker-dealers, as well as a multi-dealer platform for hedge funds.

MaxxTrader was incorporated in 2008 and has a global client and dealer franchise with more than 100 global banks, regional banks, broker-dealers and hedge funds currently connected to its platform. Its average daily volume has also grown during this time to more than US$17 billion.

SGX said the acquisition, which is expected to be completed by December, aligns with its plan to build an FX platform enabling global access to over-the-counter (OTC) and on-exchange currency derivatives.

The move will also complement SGX's 2020 acquisition of BidFX, which provides cloud-based FX trading services to buy-side clients, it added.

SGX chief executive Loh Boon Chye said the acquisition of MaxxTrader will enable the bourse to expand its FX OTC offering and widen its customer base across the sell and buy sides in the US$6.6 trillion-a day global FX market.

"Our next step is to offer clients a full suite of FX futures and OTC solutions, by building a primary FX OTC marketplace anchored in Singapore," he said. 

SGX expects to launch an FX electronic communication network connecting all institutional firms before the end of the year.

Mr Loh added that the move would also take SGX closer to its goal of reaching a wider pool of clients by providing them with more liquidity options on its platform.

"With the addition of MaxxTrader, we are well-poised to grow internationally in the FX space," he said. 

The acquisition will also bring SGX closer to its vision of becoming a multi-asset exchange and providing global clients with greater access to Asian markets, said Mr Loh.

SGX shares closed at $11.80 on Friday, up one cent, or 0.1 per cent, from the previous close.