February 2016: The Market Will Decide
Victor highlights the key criteria startups must meet in order to gain a foothold in the capital markets.
“If you build it, he will come.” That’s what the imaginary voice says to Iowa farmer Ray Kinsella one evening as he walks through his corn fields in the 1989 movie Field of Dreams.
As it turns out, “he” is “Shoeless” Joe Jackson and he does indeed put in an appearance—along with seven other players banned in the wake of the 1919 Black Sox Scandal—once Kinsella had built a baseball diamond on his farm. But when it comes to third-party vendors building technology for capital markets participants, the “he” or “they will come” sentiment simply doesn’t hold true. Our industry is no respecter of reputation and sentimentality has no place in it. In fact, like so many other markets, the financial services industry has proven to be something of a graveyard for third-party technology firms that tried their hands and struck out in what has become an intensely competitive sector.
According to an article written by Neil Patel, published in Forbes in January 2015, 90 percent of all startups fail. Yes, technology startups are not for the fainthearted.
What makes a good technology provider in our industry? To my mind, there are three criteria: It must have an outstanding product, developed expressly to address a need in the marketplace, whose design and functionality is guided by feedback from potential clients and not by what the vendor assumes the market wants; once it has developed such an offering, all its resources must focus on signing clients; and finally, it needs sufficient capital squirrelled away to sustain itself for those two or three long years it takes to break even, not only to pay its employees, but also to assure its clients that it’s in it for the long run. Needless to say, large numbers of startups fall at the first hurdle without even getting to negotiate the other two.
A startup that appears to have satisfied all three criteria is Algomi, thanks to its Honeycomb offering. I’ve written quite a bit about Algomi in recent months, not because I have a vested interest in the London-based firm, but because I’m impressed by what it has delivered—a much-needed, startlingly simple yet practical answer to one of the corporate bond trading market’s most acute needs: liquidity transparency.
The really clever bit about Algomi is that it focuses exclusively on the part of the market that is broken: aggregating dealers’ corporate bond inventories and delivering that information as a single feed to the buy side. Trades are still executed over the phone, but the market it now more transparent and therefore more liquid thanks to Algomi’s efforts. I only hope that I haven’t just put the mockers on it.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Emerging Technologies
S&P debuts Spark Assist genAI copilot, draws up ‘Blueprints’ of combined datasets
S&P’s Kensho subsidiary has rolled out new emerging tech products leveraging AI to explore and combine the vendor’s wealth of datasets to solve common use cases.
Nasdaq reshuffles tech divisions post-Adenza
Adenza is now fully integrated into the exchange operator’s ecosystem, bringing opportunities for new business and a fresh perspective on how fintech fits into its strategy.
Liquidnet sees electronic future for gray bond trading
TP Icap’s gray market bond trading unit has more than doubled transactions in the first quarter of 2024.
Verafin launches genAI copilot for fincrime investigators
Features include document summarization and improved research tools.
Waters Wrap: Open source and storm clouds on the horizon
Regulators and politicians in America and Europe are increasingly concerned about AI—and, by extension, open-source development. Anthony says there are real reasons for concern.
Waters Wavelength Podcast: Broadridge’s Joseph Lo on GPTs
Joseph Lo, head of enterprise platforms at Broadridge, joins the podcast to discuss AI tools.
Man Group CTO eyes ‘significant impact’ for genAI across the fund
Man Group’s Gary Collier discussed the potential merits of and use cases for generative AI across the business at an event in London hosted by Bloomberg.
BNY Mellon deploys Nvidia DGX SuperPOD, identifies hundreds of AI use cases
BNY Mellon says it is the first bank to deploy Nvidia’s AI datacenter infrastructure, as it joins an increasing number of Wall Street firms that are embracing AI technologies.
Most read
- Chris Edmonds takes the reins at ICE Fixed Income and Data Services
- Deutsche Börse democratizes data with Marketplace offering
- Nasdaq reshuffles tech divisions post-Adenza