“There’s no point in FX of just setting up another ECN. What we’re doing is looking to help clients build better platforms for themselves or gain faster connectivity to the ones they want to deal on.” – James Sinclair, MarketFactory
Since leaving Icap last summer, James Sinclair, Ed Howorka and Darren Jer have kept a very low profile. The three, who all held senior roles at EBS, made no secret of the fact that were going to work together in a technology-related venture. Other than that details have remained sketchy.
Details have now emerged. The trio has set up a company called MarketFactory, whose intention is to “defeat the speed of light”. Sinclair, who was at EBS from its inception and rose to be its head of research and strategy, is the company’s chief executive; Howorka, who was the original architect of EBS and later its chief technology officer, will hold the same role at the new company; Jer, who was director of new business sales in the Americas for Icap Electronic Broking, is its chief operating officer.
“We’re a technology company and we’re building platforms for people who want to trade using either their existing models in a new way or with a set of certain participants they have chosen,” says Sinclair.
“We’re developing a multi-asset solution, but with regards to FX our main aim is to help banks, funds and even exchanges combat latency. The geographical basis of FX makes latency a significant problem, and merely co-locating servers next to a platform’s matching engine is not always the solution. Speed-of-light restrictions have a huge impact. A computer can make a trade decision in 100 nanoseconds but to route the order across the Atlantic and back can take 100 milliseconds. If you made an analogy to the speed at which a human can make a decision and said it takes one second, then the order round-trip time would be 11 days.”
MarketFactory expects to have 20 members of staff by the end of March. Team members have joined from such institutions as Reuters, EBS, NYFIX Millennium, eSpeed, Trading Screen, Gain Capital, Deutsche Bank and Merrill Lynch. “We’re building a team of trading and trading technology experts and our aim is to make trading more efficient for our clients. We’ve had a good reception and we’re seeing interest in what is a challenging time for the market. Things that improve productivity and profitability will always be popular at times like these,” says Sinclair.
Given their background at EBS, many will have probably predicted that MarketFactory’s founding triumvirate would have set up a new platform. But Sinclair sees no value in this. “There’s no point in FX of just setting up another ECN. What we’re doing is looking to help clients build better platforms for themselves or gain faster connectivity to the ones they want to deal on. We’re agnostic and we’re not looking to compete with what’s already out there. If we can help deliver better execution, it will lead to an increase in volumes, which is for the benefit of all market particpants.”
MarketFactory has now reached the stage where it sees value in setting up an advisory group, effectively a board of non-executive directors. One of its first members is Jack Jeffery, former chief executive at EBS.