ICAP plc (LON:IAP), a leading market operator, has announced details of a strategic investment in Abide Financial, a global regulatory reporting specialist, although it did not disclose the actual figure.
Abide Financial manages transaction reporting for financial and non-financial counterparties in UK and Europe to help market participants meet MiFID, EMIR, REMIT and international reporting obligations. Specialized reporting services are also provided for entities subject to international regulatory regimes such as Dodd-Frank, ASIC (Australia) and MAS (Singapore).
ICAP’s decision to invest in Abide Financial marks the next step in the relationship between the two companies.
ICAP’s decision to invest in Abide Financial marks the next step in the relationship between the two companies. Indeed, in May, ICAP announced a partnership between its energy affiliate, ICAP Energy, and the reporting technology firm, to integrate its regulatory reporting capabilities for the new REMIT (Regulation on Wholesale Energy Market Integrity and Transparency) legislation.
The decision to invest in Abide Financial follows a broader trend of trading execution firms upgrading their compliance capabilities as new, stricter regulation is introduced. Indeed, until recently, fixed-income, currency and commodity markets have enjoyed rather lax oversight. Comprised predominantly of large intuitional investors, the general sentiment was that they can look after themselves.
However, after a number of high-profile market manipulation scandals, such as the LIBOR and FX fixing sagas, the need for stricter oversight and reporting requirements was highlighted. As such, a number of jurisdictions have introduced new rules. Notably, ESMA, the EU’s financial watchdog, has passed legislation that will raise reporting requirements from January 2017 and compel firms to snuff out market abuse by monitoring all orders, trades and e-communications across all five asset classes from July 2016. This will allow regulators to monitor markets more effectively.
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In recent months, ICAP has focused its investment in companies which help to facilitate risk and compliance activities.
The inter-dealer broker is obviously bracing itself for such enhanced requirements. In recent months, ICAP has focused its investment in companies which help to facilitate risk and compliance activities. Most recently, the company announced that it is investing in AcadiaSoft, which specializes in a variety of risk management and compliance solutions – its paramount offering is its MarginSphere service, allowing market participants to communicate information on exposures, commitments and adjustments between counterparties in a transparent manner.
The investment in Abide Financial was made via ICAP’s early stage funding programme, Euclid Opportunities, which supports innovative financial technology firms in the areas of post-trade risk management, data and financial market applications.
Commenting on the investment, Steve Gibson, Managing Director of Euclid Opportunities, said: “An increasing number of financial services companies are looking for effective ways to optimise their post trade reporting capabilities, we believe the opportunity for Abide Financial is significant. Their clients have spoken to us about the high regard they have for Abide Financial’s expertise, product quality and service levels, which they are now able to expand globally. We look forward to supporting Abide through the next stage of their development.”
This investment contributes to a crucial growth stage of Abide and helps us scale operations at a faster rate.
The investment represents an expansion opportunity for Abide Financial. Colin Coleman, CEO and Founder the company, said: “We are delighted to have ICAP plc as one of our investors. This investment allows us to expand our reach and strengthen our position as the partner of choice for all of the market participants’ transaction reporting needs internationally. Most importantly this investment contributes to a crucial growth stage of Abide and helps us scale operations at a faster rate. Significantly, ICAP will also be our client, and Abide will manage their … reporting obligations.”