Thomson Reuters Acquires Redi
Market data provider Thomson Reuters has just moved into the trade-execution space with its agreement to purchase buy-side execution management system provider Redi Global Technologies.
Although both parties declined to disclose the terms of the deal, which is expected to close by the end of the year, Redi CEO Rishi Nangalia stated, “This is a 100% acquisition by Thomson Reuters and Redi’s existing owners will no longer have an equity stake in the company.”
“This deal was as much about technology, clients, reputation as it was domain expertise that sits with the Redi employees,” added Michael Chin, managing director, global head of equities at Thomson Reuters.
Industry watchers see the acquisition playing an important part in Thomson Reuters’ technology and trading strategy.
“Redi has a strong buy-side/hedge fund footprint, which will help Thomson Reuters increase its presence with that increasingly important demographic allowing Thomson Reuters to expand its data, distribution, and analytics business,” said Larry Tabb, founder and CEO of industry analyst firm Tabb Group. “Also given that Redi is not a broker and helping investors connect to their brokers, the acquisition will help reinforce the relationship that Thomson Reuters has on the sell side.”
The two vendors already share many buy-side clients, according to Nangalia.
“However there is less overlap in the user base,” he added. “Eikon users typically are portfolio managers and analysts while RediPlus users are more often traders.”
Thomson Reuters plans on integrating the Redi EMS with its Eikon platform in a phased approach by moving each platform onto a common architecture through their respective upgrade cycles.
“We are not planning to re-write Redi into Eikon in the near term,” said Chin.
“There is no forced timeline to deliver an integrated product, said Nangalia. “It will be client feedback and prudent discussions along the way that will drive those technology decisions.”
Neither companies expect that the deal will result in any redundancies for Redi’s approximately 120 employees.
“The idea is to invest and grow the business,” said Nangalia. “The synergies are not planned from a people perspective. They are from other cost areas. This is an investment thesis and not a cost-cutting thesis.”
From a real-estate perspective, Redi will move from its corporate headquarters in Manhattan’s Wall Street neighborhood and other global offices into existing Thomson Reuters facilities.
“To achieve and integrated team, we want the teams in each city to be next to each other,” Nangalia added. “Obviously, Thomson Reuters’ offices are much large than ours, so we will be moving into their offices and integrating with their financial equities teams as quickly as is practical.”
Equities market-maker Spear, Leeds & Kellogg developed the RediPlus EMS in 1992, which Goldman Sachs later acquired in 2001. The investment bank then spun off the EMS vendor in 2013 with the collaboration of Bank of America Merrill Lynch, Barclays, BNP Paribas, Citadel and investment funds associated with Lightyear Capital.
For more on EMS platforms:
The BARX platform harnesses the bank's data science capabilities for better trade analytics.
TradingScreen notes that for hedge funds, equities 'electronification' is only one piece of the puzzle.
The initial focus will be on ultra-low latency market data solutions.
Post-crisis regulation has pushed markets toward centralised clearing.
It´s about lowering the overall cost of trading.