TSX buys Shorcan Brokers and Scotia Capital fixed income indices
26 October 2006 | 11603 views | 0
Source: TSX Group
TSX Group Inc. announced two initiatives today to expand its presence in the Canadian fixed income market.
TSX Group has agreed to purchase Shorcan Brokers Limited, the country's first fixed income inter-dealer broker (IDB). In addition, a wholly-owned subsidiary of TSX Group purchased Scotia Capital's Fixed Income Indices, PC Bond, and related data assets, and also signed a long term data license for Scotia Capital to continue to provide fixed income pricing data.
TSX Group CEO Richard Nesbitt said these acquisitions fit well with TSX Group's strategy. "Our stated intention is to diversify beyond equities into various asset classes, including fixed income. We already own a 47% interest in CanDeal.ca Inc., the leading Canadian electronic fixed income trading platform. Through these most recent initiatives, we will now be the leading provider of fixed income indices in Canada, and be able to offer IDB fixed income trading to our customers."
Shorcan Brokers Limited was first to establish fixed-income IDB trading rules in Canada and since December, 1998, Shorcan has been 100% owned by its employees. Shorcan which is headed by Chief Executive Officer, James P. Magee, has enjoyed thirty years of success as a leading IDB servicing the financial community. Shorcan's employees are joining TSX Group on the closing of this transaction, which is expected to take place in the fourth quarter of 2006.
Scotia Capital has been publishing indices to measure the performance of the Canadian fixed income market since 1947. The Scotia Capital indices are the most widely used fixed income performance benchmarks in Canada. The best known of these indices is the Universe Bond Index, which tracks the broad Canadian bond market. In addition to the Universe, Scotia Capital publishes a variety of sub-indices for different term and credit sectors, as well as indices for tracking other segments of the market, including High Yield, Euro, Maples, Yankee bonds, inflation-indexed Real Return Bonds, T-Bills, and residential and commercial Mortgage-Backed Securities. TSX Group also purchased PC Bond analytics package, the ScotiaBond portfolio attribution package and Scotia Capital's historical price database. Seven Scotia Capital employees involved with this business will join TSX Group, bringing a wealth of experience in this specialized area. Client services will remain the same, with support for all products and services.
TSX Group expects the aggregate cash payments in the fourth quarter of 2006 related to these two initiatives to be approximately $55 million. TSX Group, or one of its subsidiaries, will make further payments of up to $37 million related to performance incentives, data licenses and other arrangements over the term of the relevant agreements. The combined revenue for the most recently completed fiscal years was approximately $22 million.