Icap’s announcement on October that it was buying Traiana, a held company that specializes in automated post-trade processing services, triggered some talk that the broker was looking to challenge CLS, the regulator-sponsored settlement utility. Not surprisingly, Icap was swift to play this down.
The price paid – $238 million in cash and $9 million in shares – initially looks expensive. Traiana is expected to post annual revenue to January 31 2008 of just $15 million. Icap, though, expects the acquisition to be adjusted earnings enhancing in three years. A spokesman says: "Companies are all too often defined by where they’ve come from, not where they are going."
Traiana’s Harmony network is already used by more than 50 banks for post-trade FX processing and it apparently was built with multi-asset capabilities. Icap estimates the total cost of ticket processing, excluding exchange-traded derivatives, in the financial markets is $5 billion a year. It believes that technology could reduce this by 60%. If true, the deal could prove a masterstroke.
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