LSE/TMX to collaborate on fixed income venture
The London Stock Exchange’s FTSE Group and Canadian exchange TMX Group have signed an agreement to combine their fixed income index business in a new joint venture.
Under the plans, FTSE TMX Debt Capital Markets will become the third largest fixed income exchange-traded fund index provider in the world. The combined fixed income assets that use these indices as benchmarks amount to £640 billion.
The deal will work by combining PC-Bond, the TMX fixed income index business, with FTSE’s existing international fixed income index business. FTSE will own a 75% majority stake in the joint venture, with TMX holding the remainder. The LSE will gain expanded coverage in North America; TMX will gain global presence through FTSE.
“The fixed income market represents a significant growth opportunity for FTSE,” said Mark Makepeace, chief executive of FTSE and LSE director of information services. “In partnering with TMX Datalinx we can quickly create the scale, quality of operation and global distribution necessary to be a significant player in this rapidly evolving part of the index industry. To accelerate our expansion into North America, a key growth market for us, FTSE will be establishing an office in Toronto.”
As part of the deal, TMX Group will receive £72.2 million from the LSE. The business will be jointly headquartered in London and Toronto; the deal is expected to close in Q2 2013.