BMO Financial Group has agreed to acquire KGS-Alpha Capital Markets, a New York-based fixed income broker-dealer specialising in US mortgage (MBS) and asset-backed securities (ABS), for an undisclosed sum.

KGS-Alpha, established in 2010, employs 135 staff. Apart from its New York office, where most of its employees are based, the firm also has seven other offices across the US.

KGS-Alpha will be renamed as BMO Capital Markets following the completion of the deal, while its management will join BMO Capital Markets’ trading products group headed by Kelsey Gunderson.

“KGS has developed a strong reputation with institutional investors by providing a differentiated value proposition through customised market-based solutions to manage risk. In making this acquisition, we are broadening our distribution and expanding our offering through proprietary manufacturing capabilities,” Gunderson noted.

BMO Capital Markets CEO Pat Cronin said: “The acquisition of KGS is highly complementary to our strategy, leverages our existing capabilities and allows us to better serve our clients. 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.”

The deal is expected to be completed in BMO’s fiscal fourth quarter, subject to regulatory approvals.

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