Sector developments and company hires

ICE merger challenged on ‘competitive harm’
The US FTC is seeking to block the proposed merger between Intercontinental Exchange (ICE) and its top competitor, Black Knight (SCI 5 May 2022). The regulator claims that the merger would drive up costs, reduce innovation and reduce lenders’ choices for tools necessary to generate and service mortgages.

ICE owns the dominant mortgage loan origination system (LOS) in the US, called Encompass. Black Knight owns the second largest LOS in the US, known as Empower. In the FTC’s complaint, it alleges that the merger - by eliminating Black Knight as a competitor - would allow ICE to raise costs to lenders, which would then be passed to homebuyers.

Black Knight has proposed to remedy the competitive harm resulting from the proposed deal by selling its Empower LOS and some related services to a technology company, Constellation Web Solutions. According to the complaint, however, the proposal does not address the anticompetitive effects in the market for product pricing engine software and would not replace the intense competition between ICE and Black Knight in the LOS market.

ICE says that it strongly disagrees with, and will vigorously oppose, the FTC’s challenge. The company notes that in many public forums, it has outlined its vision for a more equitable housing finance system - one which is currently “fraught with inefficiencies, cybersecurity vulnerabilities, unnecessary delay and requires robust digitisation to lower costs for all participants”. It adds that the deal with Black Knight - which is intended to automate, streamline and increase transparency in the mortgage industry - will help achieve that vision.

“ICE is fully confident in our position and looks forward to presenting it in court. While that litigation plays out, the company is continuing its work toward closing the acquisition, which it expects to complete in the third or fourth quarter of this year,” the company states.

In other news…

Schroders debuts UK LTAF
Schroders Capital is set to launch the UK’s first Long-Term Asset Fund (LTAF), having received regulatory approval from the UK’s FCA. LTAFs are regulated open ended investment vehicles designed to enable a broader range of investors, with longer-term horizons, to invest efficiently in illiquid and private assets (SCI 7 May 2021). The firm says it will focus on providing defined contribution (DC) and other eligible investors with the opportunity to access the breadth of its private asset investment capabilities.

Simmons & Simmons advised Schroders Capital on the structuring, launch and FCA authorisation of the LTAF. Simmons was the only law firm represented on the Productive Finance Working Group, established by the Bank of England, the FCA and HM Treasury to develop practical solutions to the barriers to investing in long-term, less liquid assets.

The FCA notes that the ability to invest in illiquid assets - through appropriately designed and managed investment vehicles - is important for supporting economic growth and the transition to a low carbon economy. The authority is currently inviting views on ideas about how to further improve asset management regulation with a more modern and tailored regime, to ensure the regime takes account of developments in technology and supports innovation.