John “Launny” Steffens, the former head of brokerage at Merrill Lynch, is among the new backers of Xignite, a US financial data company, that secured $10m in a second round of venture capital funding.
The Silicon Valley-based group has a purpose-built private software “cloud” which contains historical data from two of the world’s two largest exchanges, Nasdaq OMX and CME Group, the futures exchange as well as BGC Partners, the inter-dealer broker.
It is betting that sweeping technological changes on Wall Street will push more financial services firms to turn to using the cloud computing services that have reshaped the use of IT in other industries.
The fragmentation of trading across venues in the US, coupled with the rising use of automated and high-frequency trading and growing use of mobile computers like smartphones has created a wave of data for market participants to organise and manage. Yesterday data messaging traffic hit a record of 6.1m messages per second, according to Marketdatapeaks.com, which measures data traffic across US exchanges.
At the same time, financial services companies profits are being crimped by soft markets and rising technology costs. By hosting an exchange’s trading data remotely – “or in the cloud”, investors can test algorithms cheaply and quickly by effectively only paying for what they use.
“Every day financial markets generate one-hundred times more data than they did just five years ago,” said Stephane Dubois, chief executive and founder of Xignite. “The big applications that Wall Street used during the 1990s is about to be replaced by little apps,” he told FT Trading Room.
Other investors in the funding round included StarVest Partners, as well as existing investors Altos Ventures and Startup Ventures. Xignite will use the fund to attract new exchanges and launch the remote hosting of bond data. It will also double its sales and marketing team by the end of the year and open an office in New York.
“We're looking to leverage the brand into more market suppliers, to go to market like Amazon did,” Mr Dubois added.
Among Xignite’s other customers include the SIX Swiss Exchange, Irish Stock Exchange, Wiener Börse, the Johannesburg Stock Exchange, the New Zealand Exchange and the Australian Securities Exchange (ASX), as well as Microsoft, and Pearson, owner of the Financial Times.