Mostly… fixed income and cross product eTrading

October 14, 2011

Fidessa vs Sungard…the endgame begins?

So, it’s now public information that Citi have signed up with Fidessa to deliver a global solution:

“Fidessa will provide Citi with an order management and distributed low-latency execution platform along with BlueBox, Fidessa’s integrated algorithmic trading engine. The Fidessa solution will also deliver risk management functionality, comprehensive market data and a global order routing service. “

http://www.automatedtrader.net/headlines/91529/fidessa-to-deliver-global-derivatives-platform-for-citi

So, a big bank takes a chance on Fidessa to deliver a comprehensive futures platform.  Citi acquired a lot of people to build up this business and they are looking to deliver something impressive.

So – what  has that got to do with Sungard vs Fidessa?

Well, remember that Fidessa started by using GL Trade gateways to markets until they built up EMMA.  Fidessa built up an equities business and they never really hit the sweet spot in the futures space.

Now they have a top tier client that has publicised this decision.  So, what happens next?  The existing GLTrade client base now sit down and think “hmmm, if Citi can do it, so can I, get Steve Barrow on the phone”.

I really want to quote Sir Winston Churchill here, but I will resist the temptation.

Now, what do Sungard do?  I refer the honourable reader to my post of some moments ago – link here

https://mostly.wordpress.com/2011/08/15/sungard-gltradebrassfront-arena-what-now/

August 15, 2011

Sungard: GLTrade/Brass/Front Arena – what now?

Filed under: etrading, FIX, Nuts and Bolts, OMS / EMS, STP — Tags: , , , , , , , — John Greenan @ 2:37 pm

Bid for Fidessa?  About £588 million market cap at £16/share. Throw on a premium – say 20% to take it to about £700 million.

Why?

A double or quits bet on the front office trading systems market.  The GL acquisition cannot be going well; why not scoop up the main competition?  Price earning of about 20.  For year ended 31st December 2010 Fidessa made a £40 million profit. That’s a decent return on equity in a downturn and beats the hell out of a bank account.

Massive synergies possible – basically you just shut down all of GL Trade and Brass and most of Front Arena.  Keep the Clearvision product offering. Integration costs will be high – closing down the Tunisia and Serbia development sites and pretty much all of the Paris based staff.

Do I expect Sungard to do it? 20% chance at best. But if you cannot beat ‘em, buy ‘em! At the moment Fidessa are eating their lunch on a drip-by-drip basis.  This would be a transformational acqusition in the true sense, since it would transform Sungard from a dying sclerotic business to being Fidessa+a few bits left from the Sungard Trading world.  Just have to make sure that the staff retention packages are enough to keep the Fidessa “magic/inner circle” onboard but not to much to let them get lazy.

Disclosure: I know people at both Fidessa and Sungard, I have not discussed this article with them and have no information other than market knowledge.

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