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TMX Group seeking data & analytics deals to build on expanded capabilities

·2-min read

By Nichola Saminather

TORONTO (Reuters) - TMX Group plans to further grow its data and analytics business with acquisitions that can help it build scale after a raft of deals in recent years has already expanded its capabilities in the space, its chief executive told Reuters.

The operator of the Toronto stock exchange, Canada's biggest, said this week it would acquire Tradesignal, a German provider of energy markets analysis tools. The acquisition was undertaken by Trayport, TMX's European wholesale energy markets platform that it bought in 2017.

Its global solutions, insights and analytics business is the biggest revenue contributor, and accounted for about 34% in the first quarter of 2021, a slight increase from a year ago.

The growth of computer-driven trading has led to a surge in demand for financial data and information, with global exchanges rushing to add the capabilities. Early this year London Stock Exchange closed its $27 billion acquisition of financial data provider Refinitiv.

TMX, among the world's top 10 stock exchange operators by market value, reported a 37% rise in first-quarter earnings this week driven by new listings and record equities trading volumes, but "you wouldn't expect to see us investing to create more equity market share," CEO John McKenzie said in an interview on Wednesday.

TMX is seeking to further expand services for issuers after the acquisition of AST Trust Company, which is expected to close in the third quarter, he said. He said TMX's long-term plan is to secure revenues that are more recurring and subscription-based, and from more global sources.

New listings growth was driven by exchange-traded funds, in particular cryptocurrency offerings, McKenzie said. Despite this, TMX won't revisit plans for a digital currency brokerage that it announced in 2018 and abandoned a year later.

"We didn't see the institutional interest in it," McKenzie said, adding TMX prefers to focus on cryptocurrency ETF offerings, including creating options and futures for these.

While TMX would be interested in joining efforts by the Bank of Canada to introduce a cash-like digital currency, "we haven't seen what market problem it's solving yet," McKenzie said.

(Reporting By Nichola Saminather; Editing by David Gregorio)