For ITG, the build or buy conundrum for entry into the equity derivatives markets was answered last week when the company announced plans to acquire RedSky Financial.

The Chicago-based broker-dealer specializes in electronic multi-asset trading and is positioned to help ITG move its product line beyond cash equities.

“We’re looking to expand into other asset classes and given the movement to electronic trading in the futures and options space, especially in equity derivatives area, this was a good next step for us,” says Tony Huck, managing director at ITG.

In addition to growing RedSky’s professional trading client base and continuing to offer its R3 trading platform as a standalone, Huck says there are also integration plans. He explains that ITG plans to integrate RedSky’s R3 electronic trading platform for equity derivatives into its Triton, Triton X and Radical execution management systems.

“Our client base for Triton is more institutional based and being able to take our Triton clients and offer them access to futures and options is a great fit,” says Huck. “The message from our clients was that the equity derivatives side of the business is only going to continue to grow and we need to be there.”

While RedSky’s offerings are generally more U.S.-focused, Huck says the system does connect to overseas venues such as Eurex and LIFFE and expanding globally will be part of the plan moving forward. “Our first focus is going to be domestically but it’s definitely out plan to move this out globally overseas as well,” he adds.

Huck says that RedSky’s innovative, low latency platform was what stuck out when ITG went looking for acquisition candidates. “Talking to their client base, everybody believes it’s best of breed and the product and technology are similar to ITGs,” says Huck. “Not only is the front-end GUI very intuitive, but the middleware and back end are very unique and we think the low latency is quite an advantage.”

As for the two companies, Huck says RedSky’s staff of 25 full-time employees and six consultants will stay on and ITG plans to leverage the company’s presence to increase its institutional coverage and gain access to additional clients in the midwest region as well.

The deal, which is expected to close in the third quarter, is valued at about $22 million.