Investment Technology Group (ITG), a provider of technology-based trading services and transaction research, is to acquire privately-held RedSky Financial, a Chicago-based broker-dealer specialising in electronic multi-asset class trading, for $22 million.
RedSky's multi-asset trading platform, R3, facilitates high frequency trading for professional and institutional traders, with an emphasis on exchange-traded equity derivative products. R3 also offers routing for foreign exchange and fixed income trading. ITG plans to integrate R3's functionality into its existing execution management systems, Triton and Radical, to give clients consolidated access to all equities, equity options and futures. Today, Triton supports equities and Radical supports equities and options.
"The acquisition of RedSky provides ITG with an opportunity to add robust options and futures capabilities," said Bob Gasser, CEO and President of ITG. Currently ITG is mainly focused on cash equities, but the company says its value proposition is based on providing clients with comprehensive trading solutions that span the trading continuum.
RedSky also offers direct access to multiple execution destinations and market data through an application programming interface (API) that allows traders using their own proprietary systems to connect directly to the markets via RedSky's routing infrastructure.
The all-cash transaction is expected to close in the third quarter and is subject to customary closing conditions. The purchase price is approximately $22 million, plus contingent consideration based on future profitability.
Reuters reports that the integrated products will roll out by end-2007. They will initially be offered to US clients, but ITG plans to expand the new offerings to Europe soon after.