RealTime IT News

Reuters Buys Online Forex Firm

Reuters Group Plc is purchasing AVT Technologies Ltd., as part of its push into the online foreign exchange business. Terms of the deal were not disclosed.

For Reuters, its foreign exchange information and trading tools division is already its biggest business unit, and the deal expands its presence in the market for automated, online trading technologies for financial firms around the globe.

With the growth of banks using online trading portals to execute currency transactions, Reuters acquisition of AVT marks a major expansion in the market. AVT brings its technology, used by more than 50 clients, and may ultimately replace Reuters' current online trading technology.

The online migration of the foreign exchange market has been significant in recent years, and the Reuters deal marks a consolidation in what is clearly a growing global market for trading currencies across borders through secure, financial trading networks. Online trading platforms have proven to be a cost-effective, and simple means for executing spot and forward foreign exchange transactions.

Reuters expects the number of global banks utilizing online trading systems, especially financial executives trading in the corporate treasuries and mutual funds markets will expand from close to 200 today to more than 700 by 2007. Online trading accounts for a growing piece of the $1.2 trillion-a-day global foreign exchange trading market.

Reuters' own online dealing system is used by medium and smaller sized banks, and the purchase is an indication the British financial information company is committed to cracking the wider, global banking market with an improved technological solution. Reuters said in a company statement that the deal positions it in "the high-growth automated dealing and limit order management markets."

Reuters will create a new division of its company, called Reuters Automated Dealing Technologies, combining AVT's 100 employees with a group of its own employees. The new unit will be headed by AVT Technologies' CEO Mark Redwood, and report to Julie Holland, Managing Director of Reuters Treasury Services. The deal is expected to be completed before the end of 2002.

Reuters corporate expansion in online trading systems comes at a difficult time for the company, which has seen its shares go from nearly $70 to just over $20, losing more than two-thirds of their market value in 2002. Reuters has a staff of 18,000 in 97 countries, and over the past eighteen months the company has announced 2,750 layoffs globally. As part of its most recent job cuts in late November, Reuters cut 50 editorial staff positions, or 2 percent of its total editorial operations. Reuters also recently pared its online editorial offerings, shutting down projects in Switzerland, South Africa, Mexico, Argentina and Singapore.