EUROPE – Pension funds could be set to save millions of pounds as a result of Posit operator ITG Europe’s plans to buy E-Crossnet, or EXN, the equities crossing network that is owned by asset management firms.

“Pension funds will save millions, literally millions of pounds,” said ITG Europe chief executive Alasdair Haynes in an interview, citing the greater liquidity and lower costs the deal could bring. “These are very significant amounts of money.”

“In seeking to add EXN to Posit we will be able to give all clients a single and enhanced liquidity pool and access to ITG Europe’s professional trading desk and other tools and services,” Haynes said.

He told IPE that ECN approached ITG a few weeks ago. Financial terms of the deal were not disclosed. The merged firm would “really try and dominate the crossing market in Europe”. Haynes said there appeared to be no regulatory problem with the deal.

ECN chief executive Nigel Foster would not be moving to ITG, Haynes said. And he was not able to say how many of ECN’s 18 staff would be retained. Sales and marketing staff would be more likely to stay, while technical staff were less likely to be retained.

ITG – part of NYSE-listed Investment Technology Group - said the move would be a “strategic acquisition aimed at strengthening Posit’s position as the pre-eminent equities crossing platform in Europe and believes this transaction will act as a catalyst to increase its growth momentum”.

All EXN’s 13 shareholders would be selling their stakes. They include: BGI, Barings, Cazenove, DeAM, Henderson, Hermes, Legal & General, MLIM, Schroders, Standard Life, State Street, UBS and West LB.

Executives from Barclays Global Investors, Merrill Lynch Investment Managers and State Street were quoted by ITG as saying the deal would mean greater liquidity and lower transaction costs.

ITG Europe had a turnover of 4.5 million pounds in the last quarter, compared to 1.7 million pounds in 2003 for E-Crossnet.

ITG anticipates a definitive purchase agreement will be in place by the end of the year.

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