MarketFactory Whisperer closer to launch

LONDON & NEW YORK – MarketFactory’s Whisperer product is being beta-tested by a group of clients made up of banks and funds, James Sinclair, chief executive of the financial technology firm in New York, has told FX Week. He expects the first client to go live early next year.

Market volatility has made the problem of distance latency even more acute, said Sinclair, which has led to growing interest in Whisperer. The software addresses the issue of distance latency across all asset classes, however, clients that have gone live with the technology all use it for foreign exchange.

Inter-regional trades, for example between New York and London, can be subject to round trip delays of 80 milliseconds. “By that time you don’t know if the price you saw will still be there,” said Sinclair.

“Whisperer uses algorithms to build a picture of the current and future order book, leading to more dealing on the exchanges and greater market liquidity. It aims to reduce slippage and improve fill ratio.”

The software can connect to any middleware or messaging interface used within a bank or fund. Users run Whisperer at each of their data centres closest to the points of liquidity.

Sinclair, former EBS head of research and strategy, co-founded MarketFactory in July 2007 along with two other ex-EBS employees: 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 (FX Week, June 11, 2007). Sinclair concedes that at first they did not know what they wanted to do with their new enterprise.

By the end of this year MarketFactory will have 20 staff, 17 of whom will be focused on technology development. Sinclair said the team’s focus for 2009 will be to expand the client base and product. “The clients have all started in FX but there is interest in going into other asset classes, especially where there are basis trades and spread trades,” he said.

Sinclair is not worried that market conditions might shift client focus away from latency issues. “Computers will continue to go faster, trading will go faster and people will continue to compete. It is not a case of substituting latency concerns for risk management concerns,” he said. “Everyone will be looking at risk management but they won’t exclude the opportunities that are out there.”

Source: FX Week