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What Investors Should Know About Fintech, High-Frequency Trading and Flash Crashes

SST Awards 2018: Most Promising Sell-Side Startup—TransFICC

Founding a fintech startup has its challenges, although the large number currently in existence across the capital markets suggest that it’s not especially tough. The difficult part is establishing a successful business that emerges from the valley of death, that can scale sufficiently to sustain itself as a business, while solving real, everyday problems for market participants prepared to pay for its service on an ongoing basis. Those are the really tough nuts to crack.

London-based TransFICC, recipient of the most promising sell-side startup category in this year’s SSTAwards, appears to have those bases covered, even though profitability is still some way off. The company was founded in March 2016 on the premise of addressing three pain points for capital markets firms active in the fixed-income and derivatives markets: combating market (liquidity) fragmentation; improving performance (numerous bonds, futures, swaps and repos execution venues update their prices thousands of times per second during market volatility); and regulatory considerations, especially around proving best execution.

In response to those challenges, TransFICC provides its clients with a single application programming interface (API) to 230 execution venues, allowing them to connect once to TransFICC’s API, eliminating coding, testing and managing upgrades. It also features secure and scalable technology allowing user-firms to keep pace with price updates and not get scooped by high-frequency trading firms, and millisecond-level normalized price/order timestamps for best execution purposes.

Steve Toland, founder of TransFICC, was providing a similar service—an API aggregation service for foreign exchange (FX)—and was approached by a colleague at a bank who wanted to understand the firm’s business model. “I drew it out for him and he asked whether we could code to 15 primary fixed-income market venues because he felt that the bank needed an alternate service provider,” Toland says. “To cut a long story short, the company I was at didn’t want to do it because it was FX-only. He thought that I was missing out on a huge opportunity and so I went to see some banks. After I had seen 10, I didn’t need to talk any more—I resigned and started writing a business plan for TrandFICC.”

Previous recipients of this category include Green Key Technologies (2015), R3 (2016) and OpenDoor Securities (2017).

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