Exchange operator Cboe Global Markets, Inc. is expanding up north.

Cboe has announced that it has entered into a definitive agreement to acquire MATCHNow, the largest equities
alternative trading system (ATS) in Canada, from Virtu Financial, Inc.

While terms of the deal were not disclosed, Cboe noted that MATCHNow is a profitable business that generated over CAD10 million (USD $7.2 million) in revenue in 2019.

Upon successful completion of this acquisition, Cboe will gain a foothold in what it says is a key capital market new to the company, while expanding the geographic presence and diversifying the product capabilities of its North American equities business. Ownership of MATCHNow is also expected to provide Cboe with a strategic pathway to build towards a comprehensive equities platform for the Canadian markets and potentially establish a significant presence in the region.

MATCHNow is Canada’s largest broker-neutral dark pool, accounting for nearly 65 percent market share in total Canadian dark trading, or approximately 7 percent in total Canadian equities volume. Canada is one of the world’s leading equities markets, where Cboe said it sees further growth potential driven by off-exchange trading, the recent opening of the market to multi-venue competition and overall robust economic growth.

Cboe stated that it has a proven track record in integrating and growing acquisitions. It plans to invest in MATCHNow’s growth, and deploy MATCHNow’s innovative products, solutions and industry expertise to serve Canadian equity markets and investors. The transaction reflects Cboe’s broader growth strategy, which includes targeting acquisitions that have the potential to accelerate its geographic and asset class presence, while deepening its customer reach.

Ed Tilly, Cboe

Ed Tilly, Chairman, President and Chief Executive Officer of Cboe Global Markets, said:

“MATCHNow offers an innovative equities platform, pioneering spirit and customer-first approach that are complementary with Cboe’s equities business.

This is a highly strategic acquisition that enables us to expand into a new key geography, and strengthens our position as a global leader in providing innovative solutions and technology to enhance our customers’ trading experience. With our U.S. and European presence covering many of the world’s largest equities marketplaces, we are excited to enter the Canadian market.”

Bryan Blake, Chief Executive Officer of MATCHNow, said:

“Cboe will bring an innovative mindset, economies of scale, market expertise and client distribution that can further propel MATCHNow’s growth and inject robust competition into the Canadian marketplace. The Cboe team has a history of developing equities markets and we look forward to enhancing our capabilities further by leveraging Cboe’s core strengths as a leading global exchange operator.”

Designed to offer enhanced execution for institutional, retail and proprietary order flow, MATCHNow combines frequent call matches and continuous execution opportunities in a fully confidential trading book. It is also a top provider of Conditional Orders, a product that is seeing growing adoption in Canada and could become a meaningful contributor to MATCHNow’s volume growth.

The transaction, which Cboe plans to fund with cash on hand, is expected to close in the third quarter of 2020, subject to regulatory approvals and other customary closing conditions.

As noted above terms of the deal were not disclosed, however, the company noted that the purchase price is not material from a financial perspective. The acquisition is expected to be immediately accretive to earnings, contributing approximately $0.01 to earnings per share in 2020.