Intercontinental Exchange (ICE), the owner of NYSE, has agreed to acquire the index business of Bank of America Merrill Lynch (BofAML).
AUM benchmarked against the combined fixed income index business of ICE and Bank of America Merrill Lynch is expected to be nearly $1 trillion.
The BaAML index business encompasses more than 5,000 fixed income, currency and commodity (FICC) indices, used by thousands of investors and market participants around the world.
Under ICE’s ownership, the indices will be re-branded as ICE BofAML Indices and become part of the firm’s data services division. This division already houses the ICE Bond Index Series of US investment grade, high yield and Treasury indices, and NYSE equity indices.
The acquisition significantly enhances the firm’s indexing capabilities and product offering in the fixed income space – one of the fastest-growing areas of the ETF universe – and pits it squarely against rivals such as Bloomberg Barclays, IHS Markit‘s iBoxx and FTSE Russell, the market leaders in fixed income indexing and benchmarking.
ICE had previously sought to build out its own index suite, introducing a family US Treasury indices in January 2016. iShares, the ETF platform of investment giant BlackRock, was an early licensee of these indices, ditching underlyings from Barclays in favour of ICE indices on four ETFs (see iShares to switch four Treasury bond ETFs to ICE indices).
Commenting on the deal, Lynn Martin, president & COO of ICE Data Services, said: “We are excited to build on ICE’s index services, which complement our leading fixed income pricing solutions in serving the demand for indexation as passive investing grows.
“We believe the BofAML Global Research FICC indices will offer customers more choice alongside the ICE US Treasury indices and NYSE equity indices as comprehensive, trusted benchmarks. We look forward to working with our investment management customers to address their requirements for new tools to grow their AUM efficiently.”
According to ICE, assets under management benchmarked against the combined fixed income index business will be nearly $1 trillion.
Candace Browning, head of global research at BofAML, added: “As the demand for independent indices rises, we are pleased to monetize this valuable set of benchmarks with a strategic owner. We look forward to working with ICE to continue to provide clients with superior solutions and service.”
The transaction is expected to complete in the second half of 2017. The terms have not been disclosed.
The acquisition is the second major consolidation in the fixed income analytics and indexing space within a matter of weeks, following the announcement at the end of May that the London Stock Exchange Group is to acquire The Yield Book and Citi Fixed Income Indices from Citigroup for $685 million (£535 million) in cash (See: LSE bolsters FTSE Russell franchise with acquisition of Citi Fixed Income Indices).