GLOBAL – The Bank of New York has bought commission recapture specialist Lynch, Jones & Ryan from Instinet Group for up to $159m (€122m).
Commission recapture aims to cut trading costs by rebating a part of trading commissions and has been used by European pension schemes including the UK’s Electricity Supply Pension Scheme and Ireland’s National Pension Reserve Fund.
The Bank of New York said New York-based LJR has 1,400 institutions are clients, representing more than $2.2trn in assets. It will operate LJR as a subsidiary of its BNY Brokerage arm and will consolidate its commission recapture business under the LJR name.
The transaction is part of a wider deal announced last week under which data firm Reuters agreed to sell its brokerage arm Instinet to Nasdaq in a deal valued at around $1.88bn.
“Commission recapture is a growth business at the moment as asset managers need to demonstrate more value to their investors,” said Ivan Royle, the Bank of New York’s European spokesman. “It’s something we are seeing more of.”
"The acquisition of LJR bolsters our position as the leading provider of agency brokerage and commission management services," said BNY Brokerage president Carey Pack.
He said the bank was excited about growth prospects in Europe and Asia. “In particular, we have significant opportunities to introduce our transition management expertise to LJR's clients.”
LJR president Todd Burns will remain as head of the bank’s combined commission recapture business. The deal is expected to close at the end of June 2005.