UK fintech vendor City Networks is making an undisclosed minority investment in London-based derivatives processing specialist Message Automation.
Founded in 2003, Message Automation provides software that automates post trade processing of OTC derivatives. In June 2006 the firm acquired Systemwire, a spin-out from University College London (UCL), which provided it with broader product coverage of derivatives processing requirements.
In a statement City Networks says it has agreed terms to acquire a "significant minority stake" in Message Automation, although details of the investment were not disclosed.
Along with the investment, the two companies have signed a partnership agreement that enables City Networks to add Message Automation's matching and reconciliation technology, which is based on Financial products Markup Language (FpML), to its own products.
Richard Hill, City Networks CEO, says given the continued growth in OTC derivatives and high level of manual processing involved, most financial firms still experience high error rates and remain exposed to significant risks and losses: "Automating these complex trades is not easy and whilst we already had some capability in this area, we wanted to provide our customers with deeper functionality that supported all derivatives processing regardless of asset class."
Commenting on the alliance, Hugh Daly, CEO of Message Automation, says: "The investment will allow us to grow our business to meet the demand we are encountering in the market. For many organisations the OTC Derivatives post trade problem is far from being fixed, and this is a powerful alliance which will go a long way to resolving this problem."