OTC Derivatives - Competitors

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Part
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OTC Derivatives & Portfolio Compression Companies


INTL.FCStone

With its main office in New York, United States, INTLFCStone is a leader in customized financial services. The company offers a range of comprehensive customized financial tools and services to their more than 100,000 clients who are then able to manage their volatility and protect their margin. They are committed to serving mid-market clients by opening them up to markets through insights, access, and guidance. Its OTC products are focused on creating more customized solutions that address the unique risk management needs for their customers.
Market position
Earnings per share in 2018 was $2.87. 2018 operating revenue was $975.80 million.

ASX GROUP

ASX is a world leader in financial market exchanges. The company provides a range of services including trading, settlement, listing, and clearing. With more than 150 years of experience in the industry, ASX is among the top five exchanges in the global platform.
Market position
The company’s earnings per share in 2018 was 127.10 cents. Profit realized by the company in 2018 was $246.1 million.

CLS Group

CLS focuses on helping its clients navigate the changing FX market place to be more efficient and reduce risks. Since its inception in 1985, the company has been committed to serving clients who are in telecommunication, renewable energy, utility, oil and gas, and construction. By implementing innovative products, their trading process has contributed to the success of their clients becoming easier, more cost-effective, and fast. They offer a range of products including OTC derivatives.
Market position
According to Finance Magnetics CLS 2017 annual revenue was £197.5 million, which, converted to U.S. dollars, is $254.9 million.

LCH Group

LCH is a premier in providing risk management solution across a range of asset including fixed income, commodities, FX, OTC, FX, Equities, and posted interest rates. By operating in an open access model, the company offers to its client a range of execution venues and efficient services. Having been in the industry for than 100 years, LCH started as a small commodity clearing company in 1888, and since then it has been experiencing steady growth over the years.
The company generates its revenue in the OTC derivatives market through an annual fee from members or charging a lower fee with variables based on volume. Additional income is generated from compression services. According to the company’s 2017 financial report, revenue realized from OTC derivative clearing was €239.6 million, which, converted to U.S. dollars, is $267.3 million. EBITDA was €197million and profit before tax was €145.7 million.

Companies in order by revenue

Based on the reported revenues for the companies we have researched and identified, they are ordered by revenue as follows.

Intercontinental Exchange (ICELink) - $3.5 billion
INTLFCStone - $975.8 million
NEX Group (TriOptima) - $762.7 million
LCH Group - $267.3 million (converted from €239.6 million)
CLS Group - $254.9 million (converted from £197.5 million)
ASX Group - $246.1 million
Capitolis - $1 million

methodology

We began by searching for publicly available industry reports, studies, articles, and blogs on the OTC derivative novation and portfolio compression market with the focus of identifying companies that operate in this market. We leveraged on sources like ISDA, Deutsche Borse Group, BIS, IBFD, Fine Extra, and ECMI among others. After a though search and analysis of these sources, we were able to identify the five companies mentioned above.
Once we'd found these companies, we looked for their competitors from sources like Crunchbase, Pitchbook, and Craft, to identify more companies in the space. However, most competitors were based on other services not specific to this industry, so we left them out. We then used each company's available annual financial report to get their annual revenues to help us determine their market position.

Part
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Part
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OTC Derivatives & Portfolio Compression - Competitive Landscape

TriOptima, Capitolis, and ICElink are three companies that compete in the OTC derivatives and portfolio compression market. Below is an overview of the value propositions of the companies, including awards, what they claim they're best at, and a description of what gives them an upper hand in the market. In addition, we have provided an overview of the target audiences of the companies.

TriOptima

Value Proposition

The company’s portfolio compression service, triReduce, has helped the company become a leader in multilateral compression. In fact, they reached a record in portfolio compression, with $250 trillion gross notional value of trades compressed. triReduce has been recognized with several awards including “Innovation in Derivatives Technology” (2016), “Best Post-Trade Services Provider: CLS-TriOptima” (2016), “Best New Post Trade Technology Product” (2017), “Excellence in Commodity Risk Mitigation” (2015), and “OTC Infrastructure Service of the Year Award” (2015).
Chartis analysts have also named TriOptima a leader in credit risk report due to the company’s “Best Buy Side Pricing/Valuation Service”, triCalculate. Chartis, which is an independent research firm, found that not only does triCalculate perform centralized XVA risk calculations, but it provides trade valuations and SIMM sensitivities for the industry as well. The firm specifically pointed out the depth of triCalculate’s “functionality, technology and content”. TriCalculate has also been praised as an analytics program, winning the “Best Sell-Side Analytics Product” at the SST Awards 2018.
TriOptima is also known for its collateral management tools, with its triResolve Margin receiving the “Best Buy Side Collateral Management Tool” in 2018 at the Buy Side Technology Awards. This service has been used by over 150 users across the globe. The 2017 FTF News Financial Technology Awards also awarded triResolve Margin the “Best Collateral Manager” award.
The company has been praised for its security as well, stating they are “experts in information and data security”. Their efforts have even secured them an ISO 27001 certification, which is considered to be the standard for international information security.

Target Audience

TriOptima’s target audience includes firms, dealers, buy-side, and corporate clients that are looking to prepare and comply with the new margin rules. In fact, in 2017, over 60 clients adopted the company’s triResolve Margin in order to prepare for these changes. Some of their current clients include Mizuho Bank, Ltd., Sampo plc, and GarantiBank International N.V.

Capitolis

Value Proposition

Capitolis claims to be “a pioneering technology provider for the capital markets”. The company was founded by industry experts and it is being funded by leading venture capital firms.

Capotolis has partnered with NEX to allow the NEX Optimisation service to be accessed by the Capitolis FX novation service through the NEX Infinity platform. NEX Optimisation is currently leading the way for market structure. The service range provided by this product includes all stages of the transaction lifecycle from "pre-execution credit checking" to "multilateral portfolio compression".

However, Capitolis is also recognized for their work in the foreign exchange market. In fact, in 2018, the company announced the launch of its above-mentioned novation service in foreign exchange. This service is known to be the “first of its kind” in foreign exchange, and the company had several collaborators on the project including Citi, HSBC, BlueCrest, and Brevan Howard. The service automates the workflow in foreign exchange prime broking and bilateral trading. This, in turn, provides efficiencies for the foreign exchange market.
In addition, Capitolis has been nominated for the FN Trading & Technology Awards Europe 2019 “Capital Markets Start-up of the Year”.

Target Audience

Capitolis’ target audience includes market participants that are looking to build under-utilized capital throughout their businesses. Like TriOptima, Capitolis has received its ISO 27001 certification. This certification also attracts buy-side, balance sheet providers, and trade processors. In terms of their foreign exchange service mentioned above, the company’s target audience also includes prime brokers, executing banks, hedge fund managers, and money managers.

ICELink

Value Proposition

ICELink is known as a leader in “global exchanges and clearing houses” as well as “data and listings services”. In fact, in 2017, ICE Clear Credit was awarded Risk’s 2018 "Clearing House" award. That same year, ICE Clear US was awarded FOW's 2017 "CCP of the Year" award. In addition, ICELink provides the “first and leadingNovation Consent solution.
ICELink has also been recognized as the most widely used “CDS trade workflow and connectivity provider”. In fact, the company provides connectivity to more than 1,120 clients. The company also provides leading customer service in the market to its clients including help desk assistance, training, project management, expert CDS professionals, and integration services.
This year thus far, ICELink CEO Jeffrey Sprecher, has won the Institutional Investor’s 2019 All-America Executive Team’s “Best CEO: Buy-side”, CFO Scott Hill, has taken second place for “Best CFO:Buy-Side”, and the company overall has taken third place for “Best Analyst Days: Buy-side”.

Target Audience

ICELink’s target audience includes:
In fact, their current client base is already made up of 1,120 of such clients.
Part
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Part
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OTC Derivatives & Portfolio Compression - Competitive Landscape 2

Below is the information that we found about value proposition and target audience for INTL FCStone and ASX Group.

value proposition

1. intl fcstone

  • One aspect of INTL FCStone's value proposition is that it's "a pioneer in specialized financial services."
  • A second aspect of the company's value proposition is the "wide array of services" that if offers and with regard to those, the company notes that "many of . . . [those services] are not offered by any other organization of . . . [its] type."
  • A third aspect of INTL FCStone's value proposition is the company's "proprietary Integrated Risk Management Program" that it offers to its customers.
  • A fourth aspect of INTL FCStone's value proposition is the breadth of financial services that it offers clients, which the company describes as "a comprehensive range of customized financial services and tools."

2. asx group

  • One aspect of ASX Group's value proposition is the company's market position as "one of the world’s leading financial market exchanges."
  • A second aspect of ASX Group's value proposition is the fact that it's "the first major financial market open every day."
  • A third aspect of ASX Group's value proposition is the company's stature within the industry as "a world leader in raising capital, consistently ranking among the top five exchanges globally."
  • A fourth aspect of ASX Group's value proposition is the company's ranking as one of the biggest "interest rate derivatives market[s]" globally and the biggest throughout Asia, with a value of $47 trillion.
  • A fifth aspect of ASX Group's value proposition is the "full suite of services [that it provides], including listings, trading, clearing and settlement, across a comprehensive range of asset classes."
  • A sixth aspect of ASX Group's value proposition is the breadth of its client/participant base, which is comprised of "6.7 million share owners, 180 participants, and almost 2,200 listed companies and issuers."

target audience

1. intl fcstone

  • INTL FCStone describes its target audience in three ways. First, the company states that it "serve[s] the under-served small and mid-size clients seeking insights and guidance."
  • Second, INTL FCStone states that it also serves "larger institutions seeking access to specialty markets."
  • However, INTL FCStone appears to particularly focus on "underserved mid-market clients." That's because on another section of its website, the company solely mentions "mid-market clients" in stating: "[W]e open markets for underserved mid-market clients with insight, guidance and access."
  • Third, INTL FCStone lists the classifications of its clients, which directly infers that such groups of people/companies comprise its target market. Those client categorizations are as follows: "[P]roducers, processors and end users of virtually every major traded commodity; commercial counter-parties; governmental, non-governmental and charitable organizations; institutional investors; brokers; professional traders; commercial banks; and major investment banks."

2. asx group

  • ASX Group's target audience consists of the following, global clientele base: "[I]ssuers (such as corporations and trusts) of a variety of listed securities and financial products; investment and trading banks; fund managers; hedge funds; commodity trading advisers; brokers and proprietary traders; market data vendors; and retail investors."
Sources
Sources