MarketAxess Holdings Inc., the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, has entered into an agreement to acquire LiquidityEdge, a leading provider of an electronic U.S. Treasuries marketplace.  The acquisition is valued at $150 million, including $100 million in cash and $50 million in MKTX stock, subject to customary purchase price adjustments.

Established in 2015, LiquidityEdge offers a bespoke trading ecosystem to connect a community of dealers, market-makers and institutional investors to trade in the $500 billion average-daily-volume U.S. Treasury market.  LiquidityEdge’s innovative custom liquidity pools, as well as direct dealer streaming capabilities, for on- and off-the-run U.S. Treasuries has been quickly adopted by a diverse client base. In conjunction with MarketAxess’ global trading network of over 1,600 institutional participants, this acquisition creates a compelling combination for global fixed income market participants.

Chris Concannon, President and Chief Operating Officer of MarketAxess, commented, “Through the acquisition of LiquidityEdge, we are bringing rates trading capabilities to MarketAxess to complement our leading position of electronic trading in the global credit markets.  This will not only enhance the trading experience for our dealer and institutional investor clients, but also offer a truly innovative solution for dealers to stream U.S. Treasury quotes to a tailored audience.”

Nichola Hunter, Chief Executive Officer of LiquidityEdge, added, “Across a few short years, LiquidityEdge has grown to become one of the leading marketplaces to trade U.S. Treasuries.  Offering an alternative to incumbent trading protocols, LiquidityEdge continues to record daily highs in excess of $25 billion. That tremendous growth is made possible by our cutting-edge approach to liquidity management and superior technology solutions, something also shared by MarketAxess.  MarketAxess has been a true pioneer in driving the evolution of the fixed income markets, and we’re thrilled that LiquidityEdge will add to that story.”

MarketAxess also announces the expansion of hedging capabilities to include Treasury hedging for MarketAxess’ credit products, utilizing LiquidityEdge’s technology infrastructure and robust liquidity network.  Currently in development and targeted to launch the initial phase in the fourth quarter of 2019, this new functionality will enhance a client’s ability to simultaneously hedge a credit spread transaction within the same workflow, maximizing efficiency and reducing rate movement risk. The partnership with LiquidityEdge will add Treasury net hedging capabilities for aggregated sets of corporate bond trades.

The transaction is expected to close in the fourth quarter of 2019, subject to the satisfaction of customary closing conditions, including the receipt of required regulatory approvals.

Source: MarketAxess