CME Group Sells NEX Exchange to Aquis for £2.7m

The CME Group has agreed to sell its NEX Exchange subsidiary for £2.7 million to Aquis Exchange PLC (AIM: AQX). The company is an exchange services group operating pan-European cash equities trading businesses. The firm also develops and licenses exchange software to third parties.

The cash consideration for the acquisition of NEX Exchange from the CME Group is £1, plus another £2.7 million based on NEX Exchange's current working capital levels. The deal is expected to boost the portfolio of Aquis by enabling listings.

Currently, the UK-based stock market for growth enterprises NEX Exchange is among the four equities-focused Recognised Investment Exchanges (RIEs) in the UK. The company has established relationships with 51 registered brokers and seven Market Makers Market Makers Market makers or called dealing desk brokers represent a type of broker that internalize flows and are taking the opposite side of a transaction submitted by their clients. The market making broker is only quoting a feed of prices to its clients. These feeds may or may not be the exact same as the prices quoted on the interbank market.Any order a client enters is processed internally and never goes out to the market, except in rare cases where a market making brokerage identifies a client as a v Market makers or called dealing desk brokers represent a type of broker that internalize flows and are taking the opposite side of a transaction submitted by their clients. The market making broker is only quoting a feed of prices to its clients. These feeds may or may not be the exact same as the prices quoted on the interbank market.Any order a client enters is processed internally and never goes out to the market, except in rare cases where a market making brokerage identifies a client as a v Read this Term. There are 89 companies which are listed on its two markets with a total market cap of about £1.9 billion.

£2m Loss for 2018

While NEX Exchange has been a loss-making enterprise for the CME Group, Aquis is confident in cost-synergies that will allow the firm to mitigate any impact on its balance sheet. Shares of the buyer are trading broadly unchanged on the news.

Back in 2018 NEX Exchange delivered revenues to the tune of £1.51 million, marking a loss before taxes of £2.05 million. According to the Board of Directors of Acquis, the company is well positioned with its technology and a track record of transparency and innovation to quickly turn around the business.

“This Acquisition is another step in Aquis' ambition to become the leading exchange services group in Europe and provides a unique opportunity to acquire an RIE business with a focus on primary markets in a cost and time effective manner,” the company shared in a statement.

The deal is also underpinned by increasing Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term, which will be crucial to transforming NEX Exchange at a time when the implications from MiFID II open the sector to innovations. The Board of Aquis also shared that the deal enables the company to build a pan-European, technology-driven, listing exchange for growth companies.

Pending FCA Approval

The deal is pending FCA approval and is expected to conclude this autumn. The Chief Executive Officer of Aquis, Alasdair Haynes, said that the deal is underpinning the company’s goal to become the leading technology-driven exchange services group.

“We have a successful blueprint of proven technology and are confident that we can not only deliver growth but we can also positively address the current issues in small and mid-cap trading. We have the capability, capacity and ambition to drive further shareholder value through this transaction,” Haynes explained.

The deal is announced less than a year after the CME Group rebranded NEX Exchange. At the time the division received a fresh capital investment and was valued at £20 million.