Baymarkets Splits into Two Companies Covering RegTech and Clearing

Reg&Tech Solutions will focus on regulatory technology and big-data storage, while Baymarkets will continue to focus on providing clearing solutions, particularly through its Clara platform.

Per Andersson, CEO of Reg&Tech, says the decision to split was made because the two businesses have increasingly grown in separate directions.

“It was natural to split the two firms. We see growth in both areas and decided it was better to separate as it can be difficult to market to very different areas,” Andersson says. “Specialization is important, especially if your product is niche. It is imperative clients know you’re good at what you do.”

This was echoed by Baymarkets chairman Peter Fredriksson. “We work in very different areas with the clearing space, where there is so much to explore, being so different from regtech,” Fredriksson says.

Reg&Tech and Baymarkets are completely separate and will not share any ownership structure, though both companies are open to working with each other.

Andersson says his firm plans to tap the more than 9,000 companies that must comply with regulations like the Markets in Financial Instruments Directive (Mifid II) and the General Data Protection Regulation (GDPR). 

For Baymarkets, Fredriksson says the clearing space also has room for growth, with more assets and trades required to be cleared.

“We have a tight relationship with the exchanges and we have been getting a lot of requests for our system,” he says. “There are also opportunities around clearing in other assets like crypto. The market is exploding.”

Baymarkets is the latest firm to break into two companies to focus on different areas, although several of the more high-profile announcements have come from companies seeking to separate their technology offerings from their trading businesses. The most recent example of this shift was Thesys Group—formerly Tradeworx—which spun off its fintech unit Thesys Technologies from its trading arm, Blueshift, which is now a fully independent company. Another notable example of this trend is NEX Group selling its voice-broking business to focus on its various tech platforms and investment arm.

Dividing a company into two different ones focusing on either trading or third-party solutions stems from cost pressures on the trading side, a recent Waters feature found, and the explosive growth of the fintech sector.