Bats Global Market has acquired institutional spot foreign exchange market Hotspot FX from KCG Holdings in a cash transaction valued at $365 million.
KCG - formed in July 2013 from a merger between Getco and Knight Capital Group - has been looking for a buyer for Hotspot FX since October on the expectation of a lift in dealing volumes as regulatory probes into the voice-brokered currency trading business intensified.
Hotspot’s average daily volume in the fourth quarter was $31.7 billion, an increase of about 20% from the first half of 2014, as big traders began shunting more business to transparent online markets. The company’s customer base includes more than 220 banks, market makers, hedge funds and institutions.
Knight Capital Group acquired the business for $77.5 million back in 2006.
Closing is expected in the first half of 2015, and represents further expansion into non-equity trading businesses for Bats as it enters the $5.3 trillion foreign exchange market.
Bats president Chris Concannon says: “We look forward to leveraging the Hotspot team and distribution network with the Bats core philosophy of making markets more efficient, transparent, and competitive as we seize the many growth opportunities the FX market has to offer.”
The deal comes just days after Bats completed the migration of the legacy Direct Edge stock exchanges, EDGX and EDGA, to its proprietary trading platform, a transaction which made it the second-largest US equities exchange group.