Rosenthal Collins Group (RCG), the well known Chicago FCM, was recently acquired by London-based Marex Spectron. After a transition that took place over one freezing Chicago weekend, it has been fully integrated into the company and is now the RCG Division of Marex Spectron.
The transition of RCG’s FCM customer business into Marex took place over the weekend of the Super Bowl and, perhaps more notably, during the “polar vortex” that hit Chicago in the beginning of February, sending temperatures down to minus 21 degrees (nearing minus 50 at times with the wind chill factor).
According to Jason Manumaleuna, the new CEO of the RCG Division: “It was no small undertaking. We changed some of the existing core systems that same weekend. We were not only bringing everyone onto the same systems but also moving Marex’s existing North American accounts into our systems. This included Marex North America’s back-office operations, as there was a preference to use RCG’s platform. Six people from the Marex offices in London had come over to help with the transfer, and we all worked straight through that weekend until everything was done. “You saw the best in people,” Manumaleuna said.
(It was after that move that RCG sold its back-office operations to Bakkt, which will use them to handle payments between Bakkt customers and merchants, after renaming them Bakkt Clearing.)
Among Marex Spectron’s reasons for acquiring RCG’s customer business is that Marex had an under-developed FCM and no Chicago presence, said Ian Lowitt, the CEO of Marex Spectron. The firm was looking to expand and grow its clearing and agriculture franchise, and it wanted to do this via an acquisition because “building something ourselves against the entrenched competition is fantastically difficult and takes more time. You’re better off taking a flourishing franchise,” he said.
Manumaleuna added that any of RCG’s prospects who liked the firm but said they wanted something bigger would now have no issues at all. “We see a lot of people coming back to talk to us. The acquisition squashed any concerns about who we are and our commitment to Chicago. Today we have a more competitive offering to put in front of clients.”
He added that nothing had changed at the firm, but “our position has been strengthened. This has been a perfect coming together of two big brands. We had little presence in the UK, and Marex did not have a big presence in the U.S.”
The acquisition gave Marex 14,000 client accounts and balances and 150 staff at the Chicago headquarters. It also gave the company the well-known RCG brand, which has been around since 1988 and traces its roots back to 1923, and a presence in the North American agricultural commodities sector – in particular grains and livestock.
The proposed acquisition was popular from the start, according to Scott Gordon, the former CEO of RCG and now vice chairman of Marex’s RCG division. When Marex and RCG presented the value proposition to RCG’s customers in December 2018, the customers loved it, Gordon said. “It was taking the best of RCG and then adding more good things on top of that. Our customers were excited about what Marex brings to the table. Clients could keep what they liked before but enjoy potentially more if they chose to take advantage of that.”
Being part of Marex gives RCG direct access to the London Metal Exchange, where Marex Spectron is a leading Category One member. This has sparked client interest from Chicago traders in arbitrage between the CME and the LME, Lowitt said, which is now possible using the Marex and RCG connectivity. This gives RCG’s client base access to a broader set of products – including metals and OTC – as well as Marex’s research and services surrounding those products. Marex also has general clearing memberships on a range of global exchanges.
The acquisition took place in an atmosphere in which FCMs are consolidating, many of them either shutting down completely or converting into introducing brokers.
RCG’s main competition has not changed, Manumaleuna said. Previously, RCG had no presence in the UK and very little presence in Europe.
Lowitt said Marex is involved in other sectors through acquisition and will continue to invest to increase its diversification and create a stronger platform for growth. Marex also recently acquired from BGC the London-based CSC, an energy trading and market making business; the company had no energy trading component in Europe previously. It is also growing its Irish entity, having acquired in January Energy Brokers Ireland (EBI), a small Irish energy broker, in order to “create more heft in anticipation of Brexit changes,” Lowitt said.
There was no overlap between what the two companies do, so there were no internal tensions during the combination of the companies, Lowitt said. RCG and Marex had very few “absolute redundancies,” Manumaleuna said.
RCG’s prop trading business was not part of the acquisitions. RCG’s holding company helped the traders there find new homes and then closed the business, Gordon said. “I heard they are doing fine,” he added.