Other Thomson equity-related trading assets that will be moved into the new company include AutEx, the indications of interest (IOI) service; Thomson Order Routing, a global trade order routing network; as well as a TradeWeb project to create an equity execution platfrom.

Brokers that have agreed to invest and are part of the new ownership structure include Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, the Royal Bank of Scotalnd and UBS. Under terms of the deal, the brokers are investing $180 million in Thomson's established markets. Separately, Thomson and the dealers will fund additional investment in asset class expanion. "This goes full circle," comments Tom Price, senior analyst at TowerGroup, noting that the brokers originally owned TradeWeb.

Thomson acquired Tradeweb in May of 2004 for $385 million plus contingent payments of $150 million over the next three years based on growth targets. One reason for the spin off is that TradeWeb had a contract with the founding investment banks that for a certain amount of time, the banks would steer liquidity to TradeWeb, according to a second source. Since that deal with TradeWeb is ending, "Thomson realized the banks would take their liquidity and shop it around, which would threaten the value of TradeWeb," says the second source. Thomson told the dealers it would spin TradeWeb back out and give them equity, continues the second source. Not only that, TradeWeb is adding Autex, which has huge community, to the mix, "so TradeWeb will be not only fixed income, but it will be equity trades as well," adds the second source.

Under the new plan, known internally as Project Fusion, Thomson and the brokers plan to make the Autex IOIs actionable and create more of a "dark pool automatic matching" engine. This is different from the Reuters and Bloomberg IOI system where the IOIs open up a negotiation through a chat window. "So a lot of the buy-side workflow has been taken into consideration."

All nine dealers have agreed to provide liquidity into TradeWeb's markets, including interest-rate swaps. The deal is expected to provide advantages for institutional clients, including accurate pricing information off which to drive analytics and modeling, greater market transparency and reduced operational complexity, according to the release.

Meanwhile, Thomson is awaiting regulatory approval on on two continents for its merger with Reuters. Earlier this week, the European Commission said it decided to open an in-depth investigation as to whether the proposed merger would significantly impede competition in the European Economic Area. In addition to news and financial information, both companies also provide trading capabilities to their customers, the EU release noted. But both sources say the spin off TradeWeb has nothing to do with the Reuters-Thomson merger. "It was in the works for a year and a half, long before the merger happened," says the industry source.

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