Thomson Reuters' acquisition of FXall, which provides electronicFX trading, gives Thomson access to FXall's customers and meansthose customers could enjoy an expanded product line and greaterliquidity. Thomson Reuters operates one of the main electronicplatforms for inter-bank foreign exchange trading, while FXall'smore than 1,300 clients are corporate treasuries, asset managersand brokers.

“This is a great move for Thomson,” says Peter Kane, a partnerat Greenwich Associates, a financial services research firm.“They'll bring the corporate and investment community closer tothem, which they need. And they'll be able to bring extensive ITand finance resources to a business that will probably need thoseresources to move to the next level.”

Jeanne Capachin, a research vice president at IDC FinancialInsights, agrees that the acquisition should benefit FXall'scustomers. “There's a potential for more liquidity, as well as anowner in Thomson who is very committed to the corporate market,”Capachin said in an e-mail.

Kane says the deal is also a plus because it will result in someconsolidation in online FX trading. “There are quite a few playersout there. There are a lot of FX aggregators and FX brokers in theelectronic space,” he says. “I think the space needs to beconsolidated for efficiency.”

Thomson Reuters will pay $22 per share for FXall, putting thetotal value of the deal announced yesterday at close to $625million. On Friday, FXall shares had closed at $15.70.

Capachin notes that when FXall went public in February, a numberof banks that had backed the platform took the opportunity to cashout. The IPO valued FXall at just $12 a share, vs. the $22 ThomsonReuters is offering.

“It's too bad the banks were so quick to sell out,” she said.“My guess is they wanted to get some revenue on their books in Q1this year, so settled for a weak price in the IPO.”

Greenwich Associates research shows that worldwide, about 60% ofbig companies and financial institutions that trade foreignexchange do some of that trading electronically. Kane says thatwhile that number hasn't changed much, the portion of their tradesthat such customers do electronically has grown over the past twoto three years, to 45% to 50%.

“More people are doing more volume through electronic means,” hesays. “If I can transact a piece of work electronically, I don'thave to call around on the phone, I have a transaction that'smanaged efficiently through straight-through processing, [and] myconfirmations are automatically done.”

The press release announcing the acquisition is here.