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29 June, 2020 - Singapore Exchange (SGX) has announced today that it will acquire the remaining 80% stake in BidFX from other shareholders for a cash consideration of approximately US$128 million. The move will expand SGX’s reach beyond FX futures into the global FX over-the-counter (OTC) market.
SGX first acquired a 20% stake in BidFX in March 2019 as part of the Exchange's multi-asset strategy to build FX into another core pillar of growth. According to today's press release, the synergies between SGX and BidFX, coupled with the opportunity to support international FX participants from pre-trade data and analytics, trade execution to post-trade clearing, propelled SGX to purchase the remaining stake. The transaction to fully acquire BidFX is expected to be completed in July 2020.
BidFX, a cloud-based FX trading platform for institutional investors, has seen record trading volumes in recent quarters. Since BidFX’s establishment in January 2017, average daily volumes have grown at a compounded annual growth rate (CAGR) of 57% to US$31 billion in May 2020. BidFX has over 100 of the world’s largest banks, hedge funds and asset managers currently connected to its platform.
With the exchange-traded FX derivatives market at only about 2% of the FX OTC market, SGX sees significant opportunities for the Exchange to build on its dominance in Asian FX futures to expand into the much larger global OTC FX market.
Loh Boon Chye, Chief Executive Officer of SGX, said, “The future of FX lies in the ability for market participants to benefit from price discovery, liquidity and transparency for both OTC and listed futures trading, in a single unified venue. BidFX is ahead of the curve in developing sophisticated electronic FX trading and workflow solutions. With BidFX as part of the SGX Group, we can now serve a wider FX community with more comprehensive solutions and enhanced distribution capabilities, while bringing together the two growing and mutually-reinforcing pools of liquidity.”
Jean-Philippe Malé, CEO of BidFX, said, “We are delighted to join the SGX group of companies and combine forces with the largest FX futures marketplace in Asia. We will be, amongst other plans, expanding our coverage to include FX futures, which gives sophisticated investors a hedge to access the broader market across OTC and futures liquidity pools. As we continue to grow, we look forward to contributing to Singapore’s success as a central FX liquidity hub in Asia.”
BidFX was previously a subsidiary of TradingScreen, which had been incubating BidFX and spun it off in 2017.
Pierre Schroeder, CEO of TradingScreen, said, “We’ve purposefully focused our efforts and resources on our best opportunities for growth and this has led to exceptional results, such as the BidFX sale being announced today. TradingScreen clients will continue to have access to BidFX via its multi-asset TradeSmart® application.”
Since the start of this year, BidFX’s global clients have been able to trade across both OTC and futures FX markets, with the option to have bilateral counterparty or centrally cleared FX exposures, all in a single venue with an integrated workflow management system.
SGX’s FX futures franchise continues to grow from strength to strength, with US$3.8 trillion in traded volumes since it started in November 2013. Last year, SGX launched FlexC FX Futures, an innovative feature that allows market participants to trade customisable FX futures in an OTC manner and clear transactions on SGX.
The companies expect that their combined expertise, client and distribution network and products will scale up the successes of both firms in this space and advance SGX’s global ambitions to offer end-to-end FX platform and solutions.
SGX is the latest exchange to acquire an FX platform as exchanges push to capture share in the Global FX market. The SGX acquisition of BidFX follows CME's acquisition of NEX (EBS) in November 2018, CBOE's acquisition of BATS (who had in turn acquired Hotspot in 2015), Deutsche Bourse's acquisition of 360T in 2015, Euronext's acquisition of Fastmatch in August 2017. The difference here is that BidFX is a more buyside focused platform. This acquisition is more akin to the Deutsche Bourse acquisition of 360T in that SGX is buying a technology platform, more aimed at the buyside, rather than a Central Limit Order Book FX Venue.
View the recent ADV history of BID FX at US$31 billion in May 2020 compared to other trading venues, on the LiquidityFinder Market Volumes page here
