State Street may be looking for a buyer for its multi-bank FX platform Currenex, with Deutsche Bourse and Euronext both in the frame as potential suitors.
Currenex was one of the first multi-dealer FX trading platforms and provides disclosed and anonymous access to liquidity across spot, forwards and swaps provided by more than 60 banks.
According to the Bank for International Settlements, it is the fourth largest multi-dealer platform with approximately seven percent market share, behind Refinitiv on 33%, FX Connect at 28% and Bloomberg's 10% share.
Though talks are not thought to be at an advanced stage, market analysts believe Deutsche Boerse and Euronext might consider the asset, given that both have said they are seeking acquisitions to strengthen their FX businesses.
Analysts at Jefferies point to DB1's 2020 roadmap strategy, which listed FX as one of five areas for M&A, while Euronext's 2022 strategy prioritises bolt-on deals in corporate services, FX, index & data, investor services, new asset classes, and post trade.
Jefferies also has a stab at a potential market valuation: "Currenex does not disclose trading volumes, but BIS market share data implies ADV of c.$95bn and suggests a similar size to DB1's FX business (2019 ADV of $92bn). DB1 has paid c.$900m to assemble its FX business via the acquisitions of 360T (2015) and GTX ECN (2018) in transactions valuing these assets at c.22x & c.20x trailing 12m Ebitda, respectively. Assuming Currenex has a similar growth profile and margins, it could attract a similar valuation (c.$900m)."