ITG Europe, operator of the Posit electronic intraday equities crossing system, is in negotiations to acquire rival buy-side crossing network E-Crossnet (EXN).
EXN was launched in March 2000 by a group of investment banks and asset management firms. The company's major stake holders are Barclays Global Investors (BGI), Merrill Lynch Investment Managers (MLIM) and State Street which acquired a 20% stake in the network in March this year.
ITG Europe, which is part of US-based Investment Technology Group, has enterted into exclusive talks to acquire E-crossnet and expects the cash deal to be concluded by the end of the year. Financial terms were not disclosed but under the proposed deal, all of E-crossnet's 13 shareholders will sell their stakes.
Alasdair Haynes, CEO of ITG Europe, comments: "In seeking to add EXN to Posit we will be able to give all clients a single and enhanced liquidity pool."
According to a report by the FT, which cites research by Merrill Lynch, crossing networks only account for one to two per cent of share trades in the fund management industry in Europe.
Peter Gibbs, CIO, MLIM, states: "We fully support the creation of a single crossing network. By increasing liquidity, more trades will be matched and investors will see the benefit in lower transaction costs."
For the third quarter of 2004, ITG Europe reported revenues of £4.5m and undisclosed profit. E-Crossnet has not reported any profitable quarters since it was launched four years ago.