In 2016, the FIA Innovator’s Pavilion welcomed 18 participants from around the world to its second annual fintech showcase.
Capital markets have evolved by leaps and bounds since then, as have many of the participants in the Pavilion. Some have struggled to live up to their initial promise, but many have established an impressive track record of success, including additional funding rounds, notable customer wins, and even outright acquisitions.
The following short profiles recap 10 of the most dynamic firms from the 2016 FIA Innovator’s Pavilion and key milestones in their growth during the intervening years.
Baton Systems: Applying DLT to margin and collateral
Baton Systems (formerly known as Ubixi) is a highly secure platform for clearing, settling and managing payments between financial institutions – like a “PayPal” for large institutions.
Founded in 2016, Baton works with market participants, including global banks, custodians and exchanges, to provide a layer of connectivity that allows money to be swiftly moved from one participant to another, settling in a matter of minutes rather than hours or days, without either side having to change their existing systems.
Notable customer wins include J.P. Morgan and LCH. In 2019, Baton and J.P. Morgan developed a distributed ledger technology-based platform to help automate derivatives margin payments. In May 2021, LCH and Baton teamed up to automate end-to-end collateral workflow for derivatives trading, using Baton’s shared permission ledger platform.
The architect of Baton’s system is chief executive Arjun Jayaram, who previously worked with Silicon Valley heavyweights such as Twitter and Yahoo. The firm has raised nearly $20 million in funding from venture capital firms, including $4 million in early 2020 from Illuminate Financial, a London-based firm specializing in capital markets startups.
Over the past year Baton has signed up former CFTC chairman Chris Giancarlo and futures and FX industry veteran Jerome Kemp as senior advisors, and it hired former Credit Suisse FX analyst Aaron Ayusa as director of client success.
Bittrex: A secure platform for crypto trading
Founded in 2014 by three cybersecurity engineers and Microsoft alumni, Bittrex is a US-based crypto trading platform that hosts trading for more than 350 different coins and tokens. It ranks in the top 20 spot exchanges based on trading volume.
Bittrex isn’t simply chasing scale, however, with a stated focus on legitimacy and institutional use including KYC identity verification. The company is based in the US and it is committed to complying with US regulation. As it says in its corporate messaging, “even revolutions have some rules.”
In addition to adhering to regulations including anti-money laundering rules and other prohibitions on any unlawful activity in its markets, the Bittrex platform enables two-factor authentication and a multi-stage wallet to protect all users
In 2019 Bittrex became a member of the Crypto Ratings Council in order to ensure use of comprehensive vetting standards. That same year, it also acquired tool provider Trade Dash to bolster its real-time technology offerings.
Looking forward, Bittrex is experimenting with “tokenized stocks,” a synthetic security tied to traditional equities where shares are kept on a blockchain in part to allow 24/7 access and global portability to big-name stocks including Apple and Tesla.
ChartIQ: Pivoting from charting to desktop integration
Founded in 2012 in Charlottesville, Va., Chart IQ was one of the five finalists in the 2016 Innovator’s Pavilion. It began by offering a professional grade HTML5 charting library solution for derivatives traders. Clients include Fidessa, now part of ION, as well as the National Bank of Canada and Yahoo! Finance. In the intervening years it has rebranded itself as Cosaic in an attempt to align its separate but complementary “smart desktop” platform, Finsemble, under one brand.
The original Chart IQ product suite is still an important part of Cosaic, offering both pre- and post-trade analytics as well as interactive educational offerings. But its Finsemble offerings are what has really caught the eye of capital markets participants. It allows a unified desktop environment that offers inter-application across different windows to allow traders to sync and share information between software. The fundamental goal, Cosaic says, is to make legacy technology more interactive and interoperable.
In 2016, Cosaic held a $4 million Series A funding round with investment led by Illuminate Financial, with participation from existing investors ValueStream and Tribeca Angels , among others. In 2019, Citi made an undisclosed strategic investment to continue the development of Cosaic’s smart desktop technology.
Cloud9 Technologies: Digitizing voice trading
Voice trading may not seem particularly high tech. However, Cloud 9 Technologies offers the derivatives industry a cloud-based communication platform that takes voice trading into the modern era. Its sophisticated take on a rather old-school form of trading was enough to win Cloud9 a place as one of the five finalists in the 2016 Innovators Pavilion.
Cloud9 connects counterparties across all asset classes via a cloud-based communication platform that eliminates the infrastructure and expense associated with legacy hardware and telecommunication-based solutions, with front-office focused data and transcription, purpose-built for the financial markets.
The platform's value proposition has been validated in multiple ways. In 2016, it raised $30 million in a Series A funding round led by JPMorgan Chase with ICAP, Barclays and Point 72 Ventures. In 2020, it raised another $17.5 million in a Series B round led by a strategic investment from UBS, with participation from existing investors including J.P. Morgan and Barclays.
Most recently, in June 2021, the company was acquired by infrastructure and technology platform Symphony in a bid to bolster its front office communications offerings. Symphony said the acquisition will bring "mission-critical trader voice capabilities" to its platform and the combined offering "will accelerate trade flows, improve transactional accuracy, and extend back office and remote worker use-cases."
Hyannis Port Research: IT infrastructure for market access
Hyannis Port Research, recently rebranded as HPR, powers electronic trading infrastructure for global investment banks, clearing firms, asset managers, market makers and exchanges. Its unique mix of hardware and software capabilities are tailor-made for capital markets, including its Omnibot “top of rack” switch that debuted in 2018. The innovative gadget centralizes market access, risk management, and data delivery in one package of hardware about the size of a pizza box.
One prominent client is Wells Fargo’s Quantitative Prime Services division. The firm recently tapped into HPR’s data center platform, starting with its market access gateway and risk management tools as a way to move beyond a patchwork of legacy hardware and into a fully integrated framework that allows for lower latency as well as cost efficiency. A top Wells exec said it was incredibly difficult to lure top talent away from major Silicon Valley tech firms to invest in the bank’s engineering team, but HPR has helped it successfully bridge the gap and compete in modern financial markets.
HPR was awarded “Best Infrastructure Provider to the Sell Side” in the 2020 WatersTechnology Sell Side Technology Awards as well as the publication’s Best New Infrastructure Technology award in 2019.
MayStreet: Innovation in market data delivery
Founded in 2012 by engineers Patrick Flannery and Michael Lehr, New York-based MayStreet offers a Data-as-a-Service platform that helps clients overcome four challenges around market data – collection, transformation, storage and the ability to ultimately consume it.
MayStreet collects data from trading venues, normalizes it, and delivers it to firms in the formats they need for their workflows, which include trade execution and surveillance, performance analysis, historical back testing, end-of-day reporting and risk and compliance.
By outsourcing the pain points of managing market data, clients are able to avoid the high costs and potential risks associated with these activities and focus their resources on business-differentiated activities.
In 2019, MayStreet became the market data provider in US equities, options and futures data for the Securities and Exchange Commission’s Market Information Data Analytics System (Midas), which helps the regulator to monitor trends in capital markets. A year later, MayStreet received Series A financing of $21 million led by Credit Suisse Asset Management's NEXT Investors.
The company is currently working to complete its global coverage, adding to the scores of exchanges and alternative trading venues in North America, EMEA, Asia-Pacific and Latin America. It also plans to expand the range of asset classes it supports from the current equities, options, futures, and fixed income data.
Earlier this year, MayStreet hired former SEC regulatory reporting advisor Manisha Kimmel as chief policy officer to support its ambitions to service firms working on regulatory initiatives globally.
PanXchange: Innovation in commodity trading
PanXchange is an OTC physical commodity exchange based in Denver, specializing in niche products including sand used in the US fracking industry and agricultural commodities produced in East Africa. The firm offers an institutional-grade trading platform for buyers and sellers of these commodities as well as related tools and services including benchmark pricing.
The exchange was founded in 2011 by Julie Lerner, who served as a senior Cargill trader in Europe and Latin America before trading energy and weather derivatives with Sempra Energy and XL Financial. The team has grown to include a team of experienced commodity experts in the unique and underserved markets where PanXchange focuses its operations.
One of the most dynamic areas for PanXchange right now is hemp. Since 2014, when the US Congress legalized the production of hemp for industrial purposes, the market for hemp has grown by leaps and bounds, creating demand for the kinds of services that PanXchange can provide. Its trading system offers precise windows and locations for delivery along with price transparency and vetting to ensure quality of market participants. The firm also currently engages in various consulting and services in the space, including publishing benchmarks and monthly spot biomass assessments.
More recently, PanXchange entered into a strategic partnership with Barchart, a widely used provider of commodity data, to share benchmark pricing on its various OTC commodity contracts including hemp and fracking sand.
QuantConnect: Democratizing algo trading
QuantConnect, founded in 2013, is an open-source algorithmic trading platform that provides its community of quantitative analysts with access to financial data and a coding environment where they can design algorithms for equities, FX, futures, options, derivatives and cryptocurrencies.
The Seattle-headquartered company essentially democratizes algo trading by making expensive technology available for free through a web browser, allowing quants to design and instantly deploy strategies in a brokerage account.
Trades are executed through several brokers, including Interactive Brokers, FXCM, OANDA and Coinbase. QuantConnect charges monthly subscriptions and makes money by introducing its customers to its brokerage partners.
In 2017, QuantConnect opened up for outside hedge funds to subscribe to the algorithms coded by its users via its Alpha Streams marketplace. Two years later, it launched Alpha Five, which enables buy-side firms to tap into the power of the crowd to solicit designer trading strategies, while giving quants the opportunity to win part of a client-sponsored cash prize pool.
In July 2021, the company launched QuantConnect Datasets, which allows users to go from research to live trading on a new dataset in minutes with a single line of code. Alternative data sources include WallStreetBets Discussion Data, Benzinga, RegAlytics, Brain, and others.
The company continues to go from strength to strength and experienced a rise in traffic at the end of last year when rival Quantopian, backed by hedge fund billionaire Steve Cohen and venture capital firm Andreessen Horowitz, shut down after nine years. QuantConnect currently has around 170,000 users from more than 160 countries, according to its website.
TopStepTrader: Training the next generation of traders
Chicago-based TopstepTrader was launched in 2012 by Michael Patak, a veteran futures trader at the Chicago Board of Trade. The company evaluates day traders’ performance in real-time simulated accounts. Traders who pass the company’s evaluation earn a funded trading account and trade FX and futures contracts in the financial markets using the firm’s capital.
The company’s goal is to provide a safe environment so that traders can professionalize their passion without putting their life savings on the line. It says it relies on everyone, regardless of position or experience, to help develop the big ideas that move the markets forward.
For those who are not ready for their performance to be evaluated, TopstepTrader University offers trading education services. It also provides traders with the skills necessary to complete the evaluation or increase profitability in their personal trading account.
Topstep has funded thousands of traders around the world since its inception, paying out millions in withdrawals. This year to date, Topstep’s traders have withdrawn over $2.5 million. The company has featured on the Inc. 5000 list of America’s fastest-growing private companies, it was selected as one of Crain’s 100 Best Places to Work in Chicago in 2018, and it has been nationally recognized on the Deloitte Technology Fast 500 list.
Vola Dynamics: Analytics for volatility traders
New York-based Vola Dynamics (previously Volar Technologies) provides analytics for options trading and risk management, as well as portfolio, profit and loss and scenario analysis.
The company’s founders, Timothy Klassen, Jiri Hoogland, and Misha Fomytskyi, have a combined 50+ years of experience in trading and modeling complex derivatives at firms including Goldman Sachs, Morgan Stanley and Getco. Klassen designed the ‘new VIX’ for the CBOE in 2003 when he was at Goldman Sachs.
Since its founding in 2016, Vola has established itself as a go-to third-party vendor to provide market-maker-quality valuations for options and other non-linear derivatives, breaking down barriers to entry and reducing the costs of maintaining the infrastructure necessary to calculate the value of these instruments in real time.
Firms including Capstone Investment Advisors, HAP Capital, LedgerPrime, Ingensoma Arbitrage, and Squarepoint Capital use Vola to maintain their core valuation analytics – pricing, greeks, borrow/forward and volatility surface fitting – for equity, futures and index options. Other clients include prop shops, hedge funds, banks and entities that have to produce accurate and fast valuations for large options universes every day.
At the 2016 Innovator’s Pavilion, a panel of judges selected Money.Net as the overall winner from among five finalists, which also included ChartIQ, Cloud9 Technologies, Semantic Evolution and Ubixi.
Here is the full list of 2016 innovators
- Cloud9 Technologies
- Hyannis Port Research
- LMRKTS LLC
- MayStreet LLC
- Panalytics, Inc.
- QuantConnect Corporation
- RealDay Options Corporation
- Semantic Evolution
- UCX (Universal Compute Xchange)
- Volar Technologies LLC
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