(Reuters) - London Stock Exchange Group (LSE.L) has agreed to buy Refinitiv for $27 billion (£22.3 billion), broadening its global footprint in financial data and market infrastructure to compete better with rivals like ICE (ICE.N) and CME (CME.O).
Apart from the London exchange, LSE owns the Milan stock exchange and Turquoise, a pan-European share trading platform that has opened a hub in Amsterdam as a hedge against Brexit.
It also operates the FTSE Russell indexes business, CurveGlobal, a trading platform for listed derivatives, and LCH, one of the world’s biggest clearing houses for derivatives.
If the deal is approved by European Union and U.S. regulators, the exchange would substantially broaden its global footprint in financial data, and become a major player in trading forex, a new asset for a company that traces its roots to listing market prices from a London coffee house in 1698.
It would also expand LSE’s base in the over-the-counter fixed income and derivatives market with three big Refinitiv OTC trading platforms, which could boost LCH’s clearing business.
The Refinitiv deal will make the LSE the world’s second largest player in non-exchange financial data by adding an entity database with information about 3 million companies and 280,000 funds.
Consultants Burton-Taylor estimate that Bloomberg LP leads the non-exchange data market, accounting for a third of the $30 billion in annual revenues in the sector.
Second place Refinitiv accounts for $6.3 billion, with data spanning economics, companies, shipping, commodities and league tables on dealmaking.
The addition of about $300 million from the LSE’s non-exchange data stable would still leave Bloomberg LP the leader.
The LSE’s overall revenue from data businesses, including information about transactions on its trading platforms and FTSE Russell indices, is about $2.9 billion, lagging leader ICE at $5 billion in a $34 billion sector, Burton-Taylor said. LSE would leapfrog ICE to $8.4 billion, if the deal completes.
Refinitiv will give LSE an entry into the world’s $5 trillion-a-day forex market, which London dominates.
Refinitiv has a 35% market share in global FX trading, with the largest dealer-to-dealer trading platform, Matching, and the largest dealer-to- client platform, FXAll, Berenberg analysts said.
Refinitiv said it trades an average $400 billion a day in currencies.
The LSE operates the MTS government bond trading platform in London and Milan.
A deal would expand the exchange’s presence in fixed income by acquiring Refinitiv’s majority-owned electronic platform Tradeweb, with its $500 billion in average daily trading.
(The story fixes typographical error in Tradeweb, paragraph 18)
Reporting by Huw Jones; Editing by Rachel Armstrong and Alexander Smith