Our free FinTech roundup includes news about DTCC & Euroclear, BNY Mellon & Milestone Group, and BMO Financial & Clearpool.
RDC Acquired for $700 Million
Credit ratings vendor Moody’s Corp. is acquiring Regulatory DataCorp (RDC), an anti-money laundering (AML) and know-your-customer (KYC) data and due diligence services provider, for $700 million, as part of an effort by Moody’s to boost its compliance offerings.
RDC, which is owned by Vista Equity Partners (Vista), an investment firm focused on enterprise software, data and technology-enabled businesses. The transaction is expected to close during the first quarter of this year.
“The transaction will be funded with a combination of cash on hand, commercial paper and debt financing. Moody’s expects the acquisition of RDC to generate approximately $55 million of annualized revenue in 2020, and to be accretive to earnings per share on an adjusted basis in 2022,” officials say. “Due to the estimated impact of amortization expense relating to acquired intangible assets, the transaction is expected to be accretive to earnings per share on a GAAP basis in 2024.”
RDC offers a proprietary Global Regulatory Information Database (GRID) that helps end-users review counterparties via “a lens of more than 60 risk types” that use 120,000 global sources. The review encompasses “adverse media coverage, politically exposed persons, government sanctions and regulatory watchlists,” officials say. The RDC platform employs artificial intelligence (AI) to bolster the accuracy and speed of compliance screening.
By adding RDC, Moody’s is building upon its acquisition of company data provider Bureau van Dijk (BvD) in 2017, which became part of Moody’s Analytics. The combined effort to come will focus on compliance solutions, which is “BvD’s fastest-growing business segment,” officials say.
In addition, BvD’s information portfolio and analytical capabilities will benefit from RDC’s dataset, which will be presented to “a broader group of financial institutions, corporations, insurance companies and government agencies served by Moody’s Analytics and BvD.”
“Including the impact of this transaction, Moody’s anticipates share repurchases for 2020 to total approximately $1.3 billion, subject to available cash, market conditions and other ongoing capital allocation decisions,” according to Moody’s. “Share repurchases during 2019 totaled approximately $1.0 billion. Moody’s received legal counsel from Paul Hastings LLP. UBS Investment Bank served as exclusive financial advisor and Kirkland & Ellis LLP served as legal advisor to RDC and Vista.”
DTCC – Euroclear GlobalCollateral Joint Effort to End
DTCC and Euroclear have jointly decided to separate their two products — DTCC’s Margin Transit Utility (MTU) and Euroclear’s Collateral Management Utility (CMU) — dissolving their joint venture, the DTCC-Euroclear GlobalCollateral operating entity.
DTCC will integrate MTU into its institutional-trade-processing business, and Euroclear will become the sole owner of the GlobalCollateral entity offering the CMU, according to the statement from the vendors.
Despite the separation, effective March 10, 2020, the companies say they will “maintain a strong working relationship.”
BNY Mellon Expands Net Asset Value Suite
The Bank of New York Mellon Corp. recently debuted a suite of oversight and contingent Net Asset Value (NAV) calculation solutions that came from BNY Mellon’s alliance with institutional investment solutions provider Milestone Group and its digital investment platform pControl, officials say.
The additional NAV solutions are intended to complement BNY Mellon’s existing fund accounting capabilities, and reinforce the custodian’s support for an open architecture strategy, officials say.
Officials say the extra NAV support will offer clients:
- NAV Review: Independent NAV oversight and reporting for funds administered across multiple providers;
- Oversight with Expected NAV: independently calculated per-share value of a fund that is intended to assist with the execution of control and oversight responsibilities;
- Back-Up & Contingent NAV: transparency and oversight into independently calculated NAV in the event the primary account platform or provider is unavailable
“As we see an increased demand for NAV oversight and backup NAV, we are pleased to provide our clients with these new solutions through our collaboration with Milestone,” says James Slater, global head of business solutions at BNY Mellon, in a prepared statement.
These new services are subject to relevant regulatory approvals, BNY Mellon officials add.
BMO Financial Group to Buy Clearpool Group Inc.
Clearpool Group, a New York-based provider of electronic trading systems and an agency broker-dealer, today reports that it has entered into a definitive agreement to be acquired by BMO Financial Group.
The transaction is subject to regulatory approval and is currently expected to close in the second quarter. Terms of the transaction were not disclosed.
Founded in 2014, Clearpool has approximately 60 employees and more 100 clients, primarily U.S. broker dealers, the firm says.
“Clearpool’s business was built on providing transparency and control to all market participants, said Aine O’Flynn, BMO’s managing director and head of global equity products. “We are committed to maintaining those principles.”
In connection with the transaction, BMO Capital Markets acted as financial advisor and Debevoise & Plimpton LLP and Osler, Hoskin & Harcourt LLP acted as legal counsel to BMO. Financial Technology Partners acted as financial advisor and Morgan, Lewis, & Bockius LLP, Murphy & McGonigle and Stikeman Elliott LLP acted as legal counsel to Clearpool.
Kooltra Names Industry Veteran as CEO
Kooltra, a Toronto-headquartered provider of cloud-based, integrated middle and back office technology for foreign exchange markets, has appointed James “Jay” Green as chief executive officer.
Green succeeds founder Adam Katz, who will become chief product officer, leading Kooltra’s product strategy, engineering and product development groups, the firm says.
Green has more than 25 years of experience in capital markets trading, sales, and e-commerce for several Fortune 500 financial services companies, per Kooltra, which notes that, prior to joining Kooltra, he held executive positions at US Bank, Morgan Stanley and Citi, among others.