New Jersey-based Knight Capital Group is acquiring online foreign exchange trading platform Hotspot FX in an all cash deal worth approximately $77.5m.
Privately-held Hotspot FX, which operates the institutional spot FX network Hotspot FXi, was founded in January 2000 by a team of senior foreign exchange managers from major international banks. The company was venture-backed by the ETF Group and currency trader Joe Lewis.
The Hotspot system displays depth of market with live, executable prices and enables buyers and sellers worldwide to trade anonymously on a 24-hour basis in a foreign exchange auction market. The platform now supports 24 currency pairs and executes 5000 to 10,000 FX spot trades per day.
Thomas Joyce, chairman and CEO, Knight Capital Group, says the addition of Hotspot advances Knight's ambition to become a virtual exchange for trade execution across multiple asset classes.
"In an increasingly fragmented market, clients want a centralised source for deep liquidity in the widest variety of securities," he says. "We also believe demand for electronic foreign exchange trading will continue to rise dramatically, especially as more institutions embrace FX as a source of alpha, and not simply a currency hedge. Hotspot's ECN-based platform is the right model to benefit from this trend."
Commenting on the acquisition, John Eley, president and CEO, Hotspot FX, says: "Knight has strong client relationships and deep technology resources that will help take the Hotspot FX marketplace to the next level."
The transaction is subject to regulatory approvals and is expected to close within 90 days. Following the the acquisition Hotspot FX will operate as a separate subsidiary of Knight Capital Group.