Merger and acquisition activity in the financial data industry has been overshadowed by a flurry of billion-dollar deals among financial technology providers, but is still a hive of activity for private equity money and consolidation. Will the data industry experience its own M&A boom, and does it provide attractive investment opportunities for venture capitalists and private equity investors?
Euclid, part of the NEX Group, has invested in 10 portfolio companies so far, two of which NEX Group acquired outright last year—ENSO Financial Analytics, a data analytics platform provider for hedge funds and prime brokers, and regulatory reporting company Abide Financial. It has minority stakes in the other eight businesses, which offer products ranging from Blockchain technology to MiFID II-compliant research provision.
Michael Spencer, NEX CEO, discusses the dangers of new EU legislation on the regulation of clearing houses. He writes, "It would be a nationalistic and retrograde step, running deeply against efficient and free markets and would impose upon London an unprecedented penalty."
Anthony Hilton writes about the modern use of stock exchanges and crowd-funding. Another effort to use stock markets to meet a genuine need is under way at the Nex Exchange, the spin-out of the markets infrastructure business which used to be hidden inside Icap.
Nex Group is aiming to kick-start the practice of pricing in the cost of funding initial margin on non-cleared derivatives trades with the launch of a margin valuation adjustment (MVA) calculator for dealers and buy-side firms.
NEX has taken on some of the identity of modern exchanges, which do many things besides count pennies for every trade and cleared contract. So, can they become the Amazon of the financial markets? Spencer would say unequivocally, yes.