Stockholm-based Orc Software, a provider of tools for electronic trading and market making, will acquire Cameron Systems, a provider of FIX (Financial Information eXchange) protocol messaging solutions. Orc CEO Jonas Lindstrom says melding Orc's electronic trading tools, access to market data feeds and exchange connectivity with Cameron's FIX messaging platform "will be a strong combination," because it will provide clients with an end-to-end electronic trading solution, from distributing data in FIX format to executing trades to delivering FIX-based post-trade information. [Ed. Note: At press time, Jonas Lindstrom stepped down as Orc CEO. According to a company spokeswoman, the acquisition of Cameron will not be affected by his departure.]
Though Orc had developed its own FIX gateway to help brokerage clients connect their buy-side customers, about a year ago, Orc realized it needed a more advanced FIX engine that was not only faster but offered additional functionality in order to take the company to the next level. "We were at a crossroads of whether we should invest more in our own offering or partner up," explains Lindstrom. As a result of the deal, Orc will replace its internal FIX engine with Cameron's FIX engine.
The final cost of the acquisition, announced in December, could reach $32 million. Orc will finance the purchase with $11 million in cash and $10 million in stock. It will pay up to an additional $11 million depending on Cameron's financial results for the period ending June 30, 2006. The branding for each company will remain in place, according to Lindstrom.
Though the deal will not close until summer, Lindstrom says the companies will begin to decide how to combine the two businesses in terms of product development and leveraging quality assurance and testing. They also will work to combine the sales and support organizations as well as their infrastructure and trading capabilities.
Orc has more than 100 market data connections. Using Cameron's Universal FIX server, it can translate the data messages into FIX and distribute the market data to both buy- and sell-side customers, Lindstrom relates. It then can route transactions via FIX back to exchanges for execution. Orc can provide direct market access to exchanges in the U.S., Europe or Asia. Orc/Cameron then can deliver post-trade information back to asset managers' OMSs.
John Cameron, founder and CEO of Sydney-based Cameron Systems, asserts that the combined organization is poised to capitalize on the wave of exchange automation. "We see ourselves in a ring-side seat to be part of exchange automation, particularly in integrating industrywide global standards into that exchange space - where they are sorely needed," he says.