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Capital Markets Start-Up of the Year (Founded in Past 3 Years)
The London based startup has developed a platform that applies formal verification, a fast-growing technology trend, to financial markets in order to help trading venues check they are executing orders fairly. Formal verification uses a mathematical model to test whether algorithms behave the way they were designed to. The process is used in several mission-critical industries such as aviation, to test that autopilot software does not behave unexpectedly. AI said its Imandra system could be used by trading firms to test their algorithms, but also by regulators and brokers to determine whether trading venues could behave unfairly. Imandra enables users to transform the hundreds of pages of documents that trading venues produce to describe how their systems work – including rules on how orders are processed – into computer code. These can then be subjected to mathematical testing to forecast any unexpected scenarios that could result in unfairness. The startup took first place in the UBS Future of Finance Challenge in 2015, a global competition between 620 companies from 52 countries.
Behavox has developed software that takes advantage of new computing techniques such as machine learning to help banks carry out surveillance of their capital markets activity and reduce the risks of fraud, misconduct and other insider compliance threats. Its software uses voice analytics and relationship mapping and measurement to create signals and patterns that can help compliance teams within financial institutions spot misconduct. Institutions can use the technology to detect types of insider trading, rogue trading and abuse of conflicts of interest, as well as more generic threats such as bribery, expenses abuse and intellectual property theft. In a recent pilot with an investment bank in New York, Behavox’s algorithms were able to detect anomalous communications between the front and back office that was missed by regulators that had recently investigated the bank. The company, which was founded in 2014 by former GLG fund manager Erkin Adylov, in July raised its first round of institutional capital from venture capital firms Hoxton Ventures and Promus Ventures.
Clearmatics helps banks and other financial institutions build platforms to settle financial instruments and automate post-trade processes through its own implementation of distributed ledger technology, called Decentralised Clearing Network. It is developing a ‘computational’ over-the-counter derivatives contract, which it believes could be an alternative to the traditional bilateral model of trading OTC derivatives and the new model involving central counterparty clearing houses. The project was presented at the Commodities Futures Trading Commission in February. Clearmatics is also working with UBS on developing a utility settlement cryptocoin, an increasingly relevant project now that the Bank of England has said it is looking into the idea of digital cash. The company was founded in early 2015 by Robert Sams, an interest-rate derivatives trader at hedge fund Sanctum, and technologist Alexandre Callea.
Mosaic Smart Data
Mosaic Smart Data’s technology helps financial institutions gain greater insight from the growing amounts of fixed income trading and client interaction data that they store. It hopes to capitalise on the growing pressures faced by banks in fixed income, by helping them overcome these challenges through data-based tools that can make them more efficient. Its flagship MSX platform aggregates and analyses all of an institution’s data on fixed income flows, so traders and their managers can better understand their clients’ behavior and grow their business. The startup has recently added a predictive analytics functionality to the platform, enabling users to find answers to questions such as which clients might be more active in a market on a given day. Mosaic was founded in 2014 by Matthew Hodgson, a former global head of rates and credit ecommerce platforms at Deutsche Bank.
RSRCHXchange is an online marketplace for institutional research, which is seeking to capitalise on changes to the research market being ushered in by new rules on dealing commissions in Mifid II. Launched in September 2015 by Vicky Sanders and Jeremy Davies, the startup provides Mifid II research aggregation, procurement and management solutions that enable institutional asset managers to buy research in a more efficient, transparent and auditable way. A sort of iTunes for research, the startup enables asset managers to track firm-wide research consumption, as well as rate and evaluate the content they receive. The platform contains research from 140 providers, which it provides to about 1,000 buyside firms, with numbers increasing every day.