AFTAs 2015: Most Cutting-Edge IT Initiative—Electronifie

The alternative trading system (ATS) is also anonymous, all-to-all, and focused on blocks rather than odd lots.

electronifie-cuttingedge
Stefan Kutko, Muggsy Bogues

This is where our judges have a little fun. In the last four years, this category has been awarded to a dark pool with a speed bump, an alternatives house client portal, a new caching project at an agency broker, and a field programmable gate array (FPGA) installation at a major bank. At face value, these have little in common. But digging deeper, they’ve each represented the best of the industry’s zeitgeist in a given year, and often come from corners of the market that don’t show up elsewhere among the AFTAs’ other categories.

Electronifie, this year’s victor, fits that description well: its focus is corporates electronification, a long-heralded but problematic niche, ripe for solutions that finally seemed to blossom in 2015. The alternative trading system (ATS) is also anonymous, all-to-all, and focused on blocks rather than odd lots.

Like past cutting-edge winners, the trading venue—led by US Securities and Exchange Commission (SEC), Goldman Sachs and Credit Suisse alum Amar Kuchinad—isn’t pursuing low-hanging fruit.

At Waters, we’ve heard the concern voiced by buy-side firms over and over that the problem with any new venue for corporates is information leakage. “How do I know my order is safe?” they ask, and that’s a fair question in a space where liquidity for large-size trades is thinner than elsewhere, and market routs can spring up seemingly overnight. At the same time, providers need to create a system that is smooth and accessible, not clunky.

What impressed the judges most about Electronifie’s entry was its direct answer to these questions: Javascript-based web technologies like Node and Meteor and delivery to desktops via secure HTML5-based container OpenFin; a proprietary “alerts” system that increases the match rate for orders above conventional dark pool logic; and a first-rate user interface that can be enhanced intra-day depending on clients’ needs, while always giving necessary transparency into activity on the platform. 

The startup received further support in recent months when two top industry veterans—former SEC chairman Troy Parades and well-known entrepreneur Max Kahmi—joined as board members, highlighting its proud independence from the banks and other large backers. With 81 firms using Electronifie today, the ATS is set to lead a growing cadre of new electronic entrants and pricing providers in the corporates market, just as further interest-rate hikes could send it for a serious spin.

With around 81 firms using Electronifie today, the ATS is set to lead a growing cadre of new electronic entrants and pricing providers in the corporates market, just as further interest-rate hikes could send it for a serious spin.

 

 

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