Acquisition in 2021: Brokers Deal Value Surpasses $1.17 Billion

As the whole world entered 2021, ​it's been more than a year since the outbreak of the COVID-19 pandemic, the global economy is set for its most robust recovery in 80 years following the coronavirus recession. This brings good news for mergers and acquisitions (M&A) activity.

An acquisition, which is very common in business, is defined as a corporate transaction where one company purchases most or all of another company's shares or assets to take control of that company and capture synergies.

Fazzaco has collected the data of acquisition activities conducted in 2021 in the forex trading ecosystem based on our news team's coverage in the hope of enlightening you about new trends in this sector.

As you can see from the chart, 11 brokers including IG Group, OANDA, Plus500 and StoneX, 9 exchanges including Cboe, Deutsche Börse and SGX as well as 13 fintech companies such as Broadridge, Square and Paysafe have made acquisitions this year.

Moreover, the deal value among brokers has surpassed $1.17 billion in 2021 as of press time, which does not include the cases where their financial terms were not disclosed.

Reasons to Acquire or Merge with

The pursuit of competitive advantage is powering acquisition deals. It's hard to achieve substantial growth once the business is mature. Thus some companies choose to gain scale and expand presence by taking market share from their competitors. Examples of such deals include OANDA acquiring all the shares of Dom Maklerski TMS Brokers S.A.​ ("TMS"), a Poland-headquartered broker. This aquisition is belived to give OANDA a significant presence in a key European market and a base to grow across the Baltic countries, complementing its already well-established, successful operations throughout Western Europe.

In addition, business leaders at many companies turned to focus on departments with the highest growth potential and distinctive competitive advantage after reviewing their portfolios. As a result, companies utilise M&A strategies to acquire capabilities they don't have - usually in technology - to enhance existing capabilities and strengthen that edge. Examples of such deals include IG Group acquiring tastytrade, Inc​, an online brokerage and trading education platform with a leading position in US listed derivatives, primarily options and futures. This transaction marks another important milestone in the delivery of IG's growth strategy, diversifying its product offering and significantly strengthening its global franchise. tastytrade is bound to significantly enhance IG's client proposition, broadening choice and opportunity while providing products, tools and educational resources to empower financial decision making, according to the Group's CEO, June Felix. 

By the same token, companies may flag those businesses that are not core to its long-term strategy, and with the lowest growth potential to develop a divestiture pipeline. For instance, StoneX, formerly INTL FCStone Inc., was reported to phase out its FX business under GAIN Capital UK (GCUK) to restructure its core activities. In February this year, GCUK was successfully integrated into StoneX Financial (SFL)​, aiming to use the capital productively elsewhere.