BMO to acquire KGS-Alpha Capital Markets

BMO Financial Group is set to acquire KGS-Alpha Capital Markets. The deal, announced Tuesday, is subject to regulatory approval and expected to close in BMO’s fourth quarter, but the terms were not disclosed.

KGS-Alpha is a New York-based fixed income broker-dealer that specializes in offering U.S. mortgage (MBS) and asset-backed securities to institutional investors. It has 135 employees.

According to a press release, acquiring KGS-Alpha will complement BMO’s existing MBS trading business. It will also make BMO a leading broker-dealer in securitized products, “with special emphasis on agency-backed residential and commercial MBS products,” the release says.

The MBS bond market is the second-largest U.S. fixed income securities market (behind U.S. Treasurys) with over US$9.3 trillion in outstanding debt as of Q3 2017 and more than US$200 billion traded on a daily basis, the release adds. KGS’s inventory is mainly comprised of agency (Fannie Mae, Ginnie Mae and Freddie Mac) MBS.

KGS-Alpha will be rebranded as BMO Capital Markets after the acquisition closes. Further, the KGS management team, sales and trading professionals will become part of BMO Capital Markets’ trading products group.

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