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Montreal/U.S., May 2 (Canadian-Media): With an aim to expand its U.S. capital markets business, the Bank of Montreal (BMO) acquiried KGS-Alpha Capital Markets, a New York-based fixed-income broker-dealer that specializes in U.S. mortgage and asset-backed securities. media reports said.
Bank of Montreal/Facebook page
"The acquisition of KGS is highly complementary to our strategy,” Pat Cronin, chief executive of BMO Nesbitt Burns, said in a statement. “The size and scope of the MBS bond market represents a tremendous opportunity to continue to diversify our platform, and grow revenues with key new initiatives.”
KGS-Alpha Capital Markets/Facebook
Founded in 2010, KGS-Alpha specializes in the structuring, trading and distribution of mortgage-backed securities and asset-backed securities.
Its inventory is 96 percent composed of Fannie Mae, Ginnie Mae and Freddie Mac mortgage-backed securities.
According to the report of the BMO Financial Group, the deal for an undisclosed amount expands its existing mortgage-backed securities (MBS) trading business.
For long, BMO had been focusing on Increasing its capital markets business south of the border and the acquisition of KGS promoted BMO's presence in the second-largest U.S. fixed-income securities market, after U.S. Treasuries.
The MBS bond market had US$9.3-trillion worth of outstanding debt as of the third quarter of 2017, and more than $200-billion traded daily, BMO said.
KGS, which employs 135 people, including 84 sales and trading staff, serves primarily institutional investors.
Its employees are concentrated in New York, but the company has seven other offices across the United States.