From the June 2011 issue of Treasury & Risk magazine

Wall Street Sale Shows Potential

Ion Trading deal could result in an integrated platform

The planned acquisition of treasury technology company Wall Street Systems (WSS) by Ion Trading, an electronic trading, pricing and risk management systems provider, could lead to increased functionality for treasury workstations.

For WSS clients, the implications of the deal, announced in April for an undisclosed sum, will hinge on Ion’s longer-term strategy.

But in the short run, “there is a logical integration between Ion Trading and Wall Street Systems in terms of their capabilities for the pre-trading and post-trading of asset classes,” says Enrico Camerinelli, a senior analyst at Aite Group.

For treasury users, the initial impact is likely to be low. “If [Ion] have just bought Wall Street to add a completely new ‘buy-side’ arm to their existing ‘sell-side’ business, I would imagine the business to be run on the same lines, at least initially,” says treasury consultant Ken Lillie of Lillie Associates.

In the longer term, the potential is for Ion to combine its electronic trading and risk management solutions with WSS’ treasury offerings.

“Wall Street Systems has made a consistent series of investments into treasury workstation components with the acquisitions of Speranza, City Financials and, more recently, Treasura,” says Camerinelli. “While these might not appear to be immediately integratable into Ion Trading, I believe the real value is in this possibility: building a platform that integrates payments, cash, trade and liquidity management on the one side, and gives the ability to plug in commodity management, FX and other asset classes on the other, giving a platform that could integrate all the capabilities that a corporate treasurer needs.”

According to Camerinelli, the deal is representative of the growing convergence of cash and treasury management with FX and commodity management for corporate treasurers. The acquisition is likely to give WSS an edge in the mid to long term over rival SunGard, which has a bigger share of the treasury workstation market, he says.

If Ion does choose to leverage the treasury workstation capabilities of WSS and provide a more complete platform for corporate treasurers, rival treasury technology companies will no doubt be looking to follow suit, potentially leading to further consolidation within the market.

Wall Street Systems and Ion declined to comment on the planned merger.

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