Leading electronic swaps brokerages iFox and atenX to merge

Rival European electronic money market derivatives brokerages atenX and iFox are merging to form ATFox.

The two individual platforms currently connect banks that account for around 60% of the total European inter-dealer money market interest rate swaps trading volume. So, when the merged platform goes live late this summer, it should become the dominant electronic inter-dealer brokerage for trading interest rate swaps with a maturity of up to two years.

Talks between the two firms began two months back, said Jack Parrish, Stockholm-based chief executive of iFox. “The merger makes sense because while we share a similar approach to the market, we have different client bases,” he added. The merger will create a client base that spans all of Western Europe – combining iFox’s strong presence in Scandinavia, Germany and the UK, and atenX’s strength in France, the UK and the Benelux countries.

Dealers agreed: “We use atenX and iFox, but perhaps each has been a little too limited individually. Merged, they will bring different participants with different outlooks together on a single platform,” said Pablo Vergara, Rabobank's Holland-based treasury manager.

As on iFox, the most heavily traded contracts on ATFox should be European overnight index average swaps (Eonias) - the predominant interest rate hedge in the money markets. After a few months of sluggish activity following September 11 last year, volumes have picked up significantly, iFox’s Parrish claimed.

Parrish said combining the best features of each individual platform should encourage more business. The new electronic platform is fundamental to ATFox’s business plan, but the new venture will take a hybrid approach. Standard vanilla derivatives will typically trade electronically, but for more exotic products, voice brokerage will be available from HPC Group – one of Europe’s largest voice brokerages and formerly atenX’s parent company prior to a management buyout in 2000.

Jack Parrish will become chief executive of ATFox, while Frédéric Metz – chairman and chief executive officer of HPC and atenX - will become chairman of the ATFox merged entity.