With the sale of the ICAP voice brokerage business in December 2016, NEX Group was born, or perhaps, re-born.
The re-booted NEX is composed of electronic OTC interest rate and FX markets, a listed exchange, plus a group of technology firms for pre- and post-trade services, as well as a venture capital firm focused on fintech. NEX CEO Michael Spencer spoke with John Lothian News at the FIA Boca conference about the newly formed company which he described as a “technology focused series of assets.”
By that he means NEX still operates four main business units: NEX Markets, which runs the EBS BrokerTec electronic trading platform for interest rates and FX; NEX Optimisation. which offers a number of technologies and services along the transaction cycle, from risk management to workflow technologies to trade optimization solutions; NEX Opportunities, the investment arm of the company aimed at investments in “pioneering” fintech firms; and NEX Exchange, a small cap stock market, formerly known as ICAP Securities and Derivatives Exchange (ISDX).
Many of the firms that come under the company’s umbrella are well known like TriOptima and Traiana. Several others such as Abide, a regulatory reporting system, and Reset, a basis risk technology, and NEX Data are also part of the new firm’s approach, which is to offer customers trading platforms such as EBS BrokerTec alongside its own products and others outside the firm.
“This restructuring of the firm was driven by my vision of the industry,” Spencer said. “The tech assets are a great growth opportunity. My vision, and my dream, is to build the world’s leading business that’s involved in OTC transactions. Of course there are lots of competitors in this space…but nobody yet has really built a world class multi-product, multi-geography OTC transaction platform.”
Spencer said there are opportunities to grow in trade optimization, meaning using technologies for better analytics, better routing, risk management and regulatory compliance. With its trading platforms, it also has room to grow beyond OTC interest rates and FX and into different asset classes and sectors, such as commodities, credit and FX forward trading.
“Historically, our business in transaction was very much built around the sell-side, high frequency trading firms and a small number of hedge funds,” he said. “We now see ourselves expanding our customer base, obviously with those clients but also toward the buy-side, asset managers, and indeed to corporate, sovereigns and super nationals. There’s a big opportunity in the transaction space.”
That combination of transaction platform and technology services company will give NEX a new way to work with customers in a more holistic way, Spencer said. The synergies of EBS BrokerTec along with its technology offerings is aimed at creating efficiencies for customers.
“It’s absolutely the right time and exciting time to be a part of it,” he said.