IWL buys broking settlement group
By Craig Phillips
IWLhas struck a deal to fully acquire the equities settlement firm Australian Clearing Services following the technology group’s 100 per cent purchase of the latter’s parent ACS Holdings.
ACS, which is a provider of outsourced agency clearing and related services to the stock broker and securities industry, was acquired for just over 1.3 million IWL shares.
The move, according to IWL chief executive officer Otto Buttula, is consistent with the group’s strategic goal of adding further scale to its retail, wholesale and outsourced broking and agency clearing business.
“This area of activity provides much fertile ground for IWL, with the Australian broking industry only just beginning to appreciate the benefits of outsourcing their clearing,” Buttula says.
ACS business generates about $4 million of revenue per annum and employs 20 staff in its Melbourne-based office.
“The acquisition is primarily synergistic, with some opportunity for product leverage and is anticipated to increase the number of contract notes currently settled and cleared by the IWL Broking Solutions division by approximately 20 per cent,” Buttula adds.
IWL Broking Solution executive general manager Geoff Reilly anticipates the Australian market will trend towards outsourcing and follow in the footsteps of the US, where less than 10 per cent of broking firms have their own back-office.
“The generally accepted model is to outsource clearing functions to specialist providers who can obtain scale and efficiency benefits,” Reilly says.
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