The cracks started to show soon after it was announced that Ion Group was acquiring Broadway Technology on February 14, 2020—Valentine’s Day. But little did they know at that point that a break-up would soon be in their future.

The deal had removed Ion’s main competitor in fixed income trading technology. “This deal makes things even more complicated for banks that want to evade the Ion stranglehold. Alternatives with critical mass are very few,” noted one industry consultant.

A second consultant echoed the sentiment, but described inertia among end users. “The thing I keep hearing people say is, ‘Oh, I’ve got to get off Ion. We’re going to form a consortium to get off Ion.’ Or, ‘I’m gonna use Broadway instead of Ion.’ Well, you call them six months later, and who are they still using? Ion,” they said.

By April 2020, the UK’s Competition & Markets Authority said Ion had failed to comply with a notice calling for “information and documents” as part of an ongoing probe into the Dublin-based vendor’s acquisition of Broadway. In July, the CMA said the deal had raised competition concerns. One month later, the watchdog revealed that to get the deal over the finish line, Ion would split Broadway, keeping its foreign exchange (FX) business, while spinning off the fixed income franchise. And in November, the CMA formally gave its blessing to the restructured tie-up. As far as the fixed income community was concerned, the break-up was complete.

Today, the reincarnated Broadway Technology is fully independent. “When Ion had to spin out Broadway, what they had to spin out was the fixed income trading workflows and the entire solution set—which we like to refer to as Broadway 2.0,” Michael Chin, the company’s new CEO, tells WatersTechnology.

Before explaining the ethos behind Broadway 2.0, it’s first important to establish a few facts, as the Ion acquisition and subsequent spin-off was a bit complex. To start, Broadway’s previous CEO and co-founder, Tyler Moeller, is still with the London-based vendor, focusing solely on the tech as its chief innovation officer. Additionally, Broadway is still with Long Ridge Equity Partners, its pre-Ion owner, as well as a handful of other new (but unnamed) investors, and there’s also Moeller, who Chin says is “a significant owner.” 

Next, let’s establish what went to Ion, and what is still with Broadway. Ion now owns the latter’s FX platforms, including Barracuda FX, which Broadway had acquired in April 2019. Broadway, on the other hand, kept the entirety of the fixed income solution set and trading workflows, which includes the Toc platform, which underpins everything that Broadway was built on and that clients build and integrate into. Broadway also kept Greyspan, the company’s infrastructure-as-a-service business.

Most importantly, though, is that there aren’t any strings attached to the break-up.

“There’s absolutely no connection [to Ion]; there’s no non-compete,” Chin says. “It’s still a fair, competitive landscape that we both can play in.”

Second chances

Prior to the Ion acquisition, Broadway stated that its roster of clients included “more than half of the top 50 banks in the world.” While Chin wouldn’t address specific clients, he did note that they “did not lose any clients during the transition into a separate company.” He also declined to say how many employees went over to Ion, but he says that the company is about “100 people strong.”

Broadway made its bones in the fixed income market, launching in 2003 and rising to become one of the leading platform providers in the space—hence the CMA’s concerns that merging with Ion would create a monopoly. Currently, Broadway covers the full suite of rates products, from interest-rate swaps to government bonds and repos. When asked if the vendor would expand back into FX, Chin was non-committal, but says Broadway already offers support for futures, and adds that “We have solved FX and crypto trade flows for clients in the past.”

In addition to the various Ion-acquired entities, Broadway competes with the likes BlackRock/Aladdin, State Street/Charles River, FIS, MarketAxess, as well as companies like Axe Trading, SmartTrade, TransFicc, Valantic, SoftSolutions, among a number of other fintechs that serve the sell side and buy side.

Beyond being simply a pure-play trading platform provider, one area where Broadway may look to grow its revenue base is through its as-a-service offering, and through white labeling.

Like so many other trading platform providers, Broadway wants to provide a more open and connected trading environment for users. Eitan Reich, Broadway’s chief architect, who has been with the company since 2007, says that because it embraced Open API development early on, Toc is interoperable with other third-party and internally-built applications. So, for example, if a broker-dealer really likes a specific pricing engine, that third-party app can plug into Toc through an API, rather than Broadway trying to force the broker to switch to its own pricing engine.

The key for Broadway is to be able to handle evolving fixed-income workflows as the fixed-income markets become more electronified.

“We’ve been through different iterations and transformations,” Reich says. “We expanded into other asset classes and workflows—D2D [dealer-to-dealer], D2C [dealer-to-client], relative-value trading, derivatives, futures, etcetera. But that north star is to be at the forefront of innovation and electronification of markets, and being a platform that makes it really easy for different kinds of market participants to express their own innovative workflows and business rules on an open and flexible platform. And that platform needs to be interconnected with the rest of the marketplace—interconnected with the rest of their own internal systems—but then also provides a platform where they can do their own innovation on top of it.”

Brad Bailey, research director for Celent’s capital markets vertical, says Broadway’s Greyspark managed-service component—which is unique among other tech providers in the space—will allow it to create differentiated offerings, especially for the sell side.

“Broadway has always been good in technology—they have good tools, they have good managed service abilities, and I can see them offering that through white labeling, because it’s not like just the big players need this. If you’re doing this type of business, there’s more and more demand for different-sized players to get the right type of technology,” he says. “I’ve been seeing a lot of activity by both the sell side and buy side in reworking their fixed income workflows. What you see is demand for that last mile of trading.”

Chin says Broadway already has clients “who white label our software solutions to provide systems to their clients,” and adds that the company does have visions of building out its as-a-service offering.

“The Greyspan business in itself is a significant part of our revenue stream,” he says, adding that it is “not only infrastructure that is supporting our own trading platform, but also as a standalone provider of infrastructure-as-a-service for clients who don’t even leverage Broadway’s trading itself.”

The company is also going to look to lean into the burgeoning field of low-code software development. Executives at Broadway contend that they’ve been doing low-code “for years,” and will now look to properly market their services to end-users as being low-code, covering a range of languages, including Python, C++, C\#, R, Java, and Matlab.

Bailey thinks that this is a smart play. “If they can take those tools and create a scripting or no-,or whatever you want to call it, on top—whether that’s Python into their core C++ engines—they can offer a lot there,” he says. “They have a really interesting system; the key is to get that into more people’s hands where they can do self-service.”

New beginnings

To get background on Broadway, WatersTechnology spoke with several other market participants in the fixed income space. The three main questions that came up as to the vendor’s future were, “What is Long Ridge’s long-term plan for Broadway? How does the dynamic between Moeller and Chin work? Are they going to be active in the M&A market?”

To answer those questions, it might first be helpful to look at Chin’s background.

Chin has spent his entire 30-plus career in the capital markets, first as a fixed-income trader at JP Morgan, before moving to the vendor world. He spent a decade at TradingScreen, before taking over as CEO of ultra-low-latency trading platform provider Mantara in 2010. About four years later, he joined Thomson Reuters and stayed on through the Blackstone-led acquisition of its Financial & Risk division, which became Refinitiv, and through its subsequent acquisition by the London Stock Exchange Group. So, he has experience running a company, and he has experience going through a major acquisition.

Chin jumped at the chance to lead Broadway 2.0, saying that it offered him a chance to “get back to the roots of real fintech, real creativity, and a company that is agile and growing.”

While noting that Refinitiv has “amazing people and amazing technology,” he felt a bit confined due to Refinitiv’s size and all of the changes that were swirling around the company. “It was a point in time where things just came together,” he says. “I love the fixed-income markets—that’s where I came from in terms of my trading background. At Refinitiv, part of my role was running the fixed-income trading business, which was really all about our data and our relationship with Tradeweb, but I had always wanted to infuse a fixed-income trading capability in Refinitiv. I didn’t have the opportunity to do that—but Broadway was obviously the innovator in that market, and that’s why I came on board.”

Just three months on the job, Chin says he’s excited to work alongside Moeller and the rest of the Broadway team, and has “already seen a real commitment from [Long Ridge] to continue to invest” in Broadway. And as for potential M&A involvement—specifically, whether or not Broadway will be an acquirer, rather than an acquiree—he says that “nothing is off the table. If the mandate is to grow, the mandate is to scale, and the mandate is to stay ahead of what we see the market doing, then there are different paths that we’ll look at to do that.”

Break-ups are never easy, but they offer the opportunity to start fresh. Chin is still not yet ready to delve into the exact details of what Broadway 2.0 will fully entail, but the focus will be on fixed-income trading workflows, growing its as-a-service offering, and providing a more interoperable trading environment.

“One of my immediate mandates when I came on board was to lay out that three-year blueprint for the company and really think about what is going to be required for us to deliver on a number of different pillars to the strategy,” he says. “We’re in the process of finalizing that and building up all the investment cases so that I can bring that to the board.”