FinTech Group AG, a Frankfurt Stock Exchange listed financial firm, has announced that they have entered a strategic partnership with Commerzbank. Under terms of the deal, Commerzbank’s Securities division is entering a long-term contract to supply order flow and take over FinTech Group’s B2B CFD business, CeFDex.
One of FinTech Group’s portfolio businesses, CeFDex provides CFD market making liquidity to the German market. The unit is the CFD liquidity supplier to flatex, FinTech Group’s online forex and CFD broker, that holds a strong market share position in Germany.
With the partnership taking place, FinTech group will be winding down CeDFex, with Commerzbank soon taking over the handling of CFD orderflow from flatex customers. Despite the change in counterparty, flatex account holders aren’t expected to be affected by the deal.
According to FinTech group, the partnership is expected to decrease the firm’s risk exposure, while freeing up a double digit million euro sum in regulatory capital. In addition, FinTech group expects the deal to reduce their annual expenses by a single digit million euro sum. The firm is also receiving a one- off payment from Commerzbank as part of the deal.
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For its part, Commerzbank gains profit opportunities through trading related gains in supporting flatex and FinTech group’s other B2B customer CFD order flow. A portion of ongoing revenues from the order flow business will be split in a profit sharing deal with FinTech Group.
Mario Furlan, Head of Retail CFDs at Commerzbank, commented on the partnership, “We are very pleased about the partnership with FinTech Group. Combining our excellence in risk management and execution of CFD transactions and FinTech Group’s strength and innovation in the retail market with its subsidiary flatex makes a lot of sense and will beneficial to both partners.”
FinTech Group CEO Frank Niehage added, “We are glad that we have been able to seal the new CFD partnership with Commerzbank, especially as we have been working together with Commerzbank very successfully since many years. For example, our subsidiary XCOM operates the OTC trading system of Commerzbank and flatex is one of the most active distribution partners for Commerzbank´s structured product business. Now we can lead this partnership into a new dimension. We are excited to continue developing the CFD business together with Commerzbank and to focus on generating new clients via flatex.”
In reaction to the news, shares of FinTech group are trading higher by nearly 5% to €14.14.