Bats Global Markets Inc. announced Thursday that it signed an agreement to acquire Javelin SEF LLC, a derivatives trading venue that focuses on execution of interest rate swaps.
Interest rate swaps allow borrowers to change the terms of their existing debt by swapping them out with another borrower who procured funds on different terms. For instance, one borrower may have a loan with a variable interest rate and another at a fixed rate. During the period of the loan, one set of terms would be more attractive than the other, creating an opportunity for both hedging and speculating.
New York-based Javelin SEF creates a marketplace for people looking for a swap partner, allowing them to negotiate terms. Bats plans to use the platform as a way to accelerate its plans to offer trading of non-deliverable forwards (NDFs) in the foreign-exchange market.
Terms of the deal were not disclosed. If approved by regulators, Javelin will be integrated into Hotspot FX, which is the company’s online foreign currency exchange subsidiary.