Broadway Technology’s fixed income spin-off raises questions about competitive landscape

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Tyler Moeller, the CEO and co-founder of Broadway.

The UK’s Competition and Markets Authority (CMA) has agreed the takeover of Broadway Technology by ION Trading Technologies, allowing ION to expand its grip on the order and execution management system (O/EMS) market for sell-side firms.

The deal is contingent upon Broadway divesting itself of the fixed income trading technology business that it runs, which will be acquired by a consortium led by Tyler Moeller, the CEO and co-founder of Broadway.

The new fixed income entity could either exist as a standalone platform and business, or under the terms of the CMA deal, could be sold to another party if approval was granted by the CMA. This could present an interesting opportunity for technology providers in the space, many of whom have struggled to achieve critical mass.

Andrea Pignataro, CEO and founder, ION Trading.

Moeller has considerable experience in bond trading technology. He ran Kats Trading between 2001 and 2003, a low-latency proprietary trading firm that focused on execution of US Treasuries, the most liquid – and electronically traded – fixed income market. Ion was also founded by a former bond trader, Andrea Pignataro.

In an analysis of the initial takeover in April 2020, the CMA found that allowing ION to acquire Broadway’s bond business would create a two-horse race in dealer trading systems, with Bloomberg being the only competitor with any significant market share.

The deal will allow ION to acquire the foreign-exchange trading element of Broadway’s existing portfolio.

ION has proven to be a controversial business; after its takeover of Fidessa which set a high target of job cuts, one former staffer said, “Given the quality of the people they let go, I feel quite honoured.”

The deal also led some sell-side firms to comment behind the scenes that the model of charging both buy- and sell-side firms for using the Fidessa platform was excessive. Talk of a sell-side migration off ION platforms had even begun prior to the outbreak of the COVID 19 pandemic.

However, the ION model of aggregating smaller, niche financial technology firms without integrating the systems is hardly new; other firms such as Sungard, now FIS, grew to considerable size using the same model.

Neither Moeller nor ION responded to a request for comment by time of publication.

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