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INTL FC Stone to acquire Cleartrade Exchange

The Singaporean-based Cleartrade Exchange (CLTX) futures market is selling out to INTL FCStone Inc, a provider of execution and advisory services in commodities, currencies and international securities.

The firm says it has agreed with CLTX to acquire immediate voting control and the right to acquire up to 90% of equity interest over a five-year period, suggesting a long transition. Completion of the deal is subject to the final stages of due diligence, regulatory approval from the Monetary Authority of Singapore (MAS), and the satisfaction of the CLTX board during the handover process.

CLTX is a regulated futures market, providing an electronic global marketplace for commodity futures and over-the-counter (OTC) cleared derivatives. It is a Recognised Market Operator (RMO) regulated by MAS, and was facing considerable market and regulatory changes in common with the rest of the industry under the incoming requirement for central counterparty (CCP) clearing, which is effectively forcing derivatives trading back ‘on exchange’ following the Pittsburgh G20 post-crash meeting.

The company provides traders, brokers and hedge funds with an electronic order book and block trade facility, trade processing, reporting and straight through processing (STP) to multiple clearing houses.

"CLTX has rapidly succeeded in becoming an important execution venue for commodity derivatives. We are very impressed with their technical, operational and regulatory implementations undertaken to meet the demands of the changes in global derivatives regulations driven by Dodd-Frank and other G20 mandates,” said Scott Branch, president of INTL FCStone. “We are looking to leverage our broad global customer base, focused on commercial hedgers, and our expertise in commodities to support the expansion of the Cleartrade Platform. We look forward to working with Richard Baker [the chief executive officer CEO] and his team to realise CLTX's significant potential.”

CLTX was founded in February 2010 and began operations in March 2011, when it received its regulatory licence. It now has more than 30 trading members, offering 43 commodity contracts, electronic connections to LCH.Clearnet, SGX and NOS and price distribution via desktop and mobile.

According to CEO Baker, CLTX will retain its autonomy as a regulated exchange with the continued implementation of exchange-related initiatives for the benefit of its exchange members and the market in general. Both parties will look to explore a range of short- and long-term business synergies, and the achievement of these is likely to complete the merger process.

“I am delighted to have reached this agreement with INTL FCStone,” continued Baker. “This deal concludes the share issue objectives as outlined in our announcement on 28 February 2013. Following discussions with a number of interested parties we concluded that INTL FCStone was the best partner for CLTX in terms of corporate business synergies of both products and services. CLTX will benefit from leveraging their global business presence and reach. This relationship will deliver the foundations for the growth plans for CLTX and will enhance the trading opportunities for our current and future members. Since the inception of CLTX, it was always our intention to undertake such a partnership at this stage in our strategic roadmap.”