Ex-EBS trio develops new distance latency product

By Moana Burt
NEW YORK – Market Factory, a company formed by three former senior EBS figures, is developing a software product that could potentially be sold back to their former employer.

Chief executive of Market Factory and former EBS head of research and strategy, James Sinclair in New York said that, while the company was only currently working with banks, hedge funds and exchanges, which he declined to name, the technology could potentially be used by electronic communications networks and foreign exchange trading platforms.

Sinclair said the software will enable institutions to overcome distance latency problems by allowing market data to be viewed and trades to be routed in a way that overcomes “speed of light” limitations, benefiting companies trying to expand an overseas client base or trading with a distant venue.

Sinclair, Ed Howorka, former EBS chief business risk officer and original architect of the EBS system, and Darren Jer, ex-director of new business sales in the Americas, resigned from the electronic spot broker in June last year (FX Week, June 11). The shock departure came shortly after the departure of the company’s then-chief executive, Jack Jeffery, who will sit on the Market Factory non-executive board.

The trio incorporated Market Factory last July, and since that time has acquired 19 employees from companies including EBS, Reuters, NYFIX Millennium, Cantor Fitzgerald/eSpeed, Trading Screen, Gain Capital, Deutsche Bank and Merrill Lynch. The company is funded by private investors, who include the former EBS trio and “people we know from our professional lives”, said Sinclair.

Sinclair declined to detail exactly how the software will work, except to say it is designed to help institutions execute trades more profitably by improving efficiency in internal flows and external execution. The software is able to be used across a range of asset classes and is complementary to “everything that is out there” in terms of existing platforms, bank systems and hedge fund systems, added Sinclair.

While the product is still in development, some aspects will be ready in the third quarter. The first client is due to go live later this year.

The rise of algorithmic trading and the dispersed, global nature of the market made distance latency an “acute problem” for the FX industry, said Sinclair. At present it takes around 100 milliseconds to route a trade across the Atlantic and back, while a computer only takes 100 nanoseconds to make a trading decision, he explained.

Source: FX Week