Fixed income and derivatives venue connectivity specialist TransFICC has secured £5.75 million in a recent funding round which included HSBC and ING, as it confirms plans to roll out a buy-side version of its flagship API platform.
The Series A investment round was led by Albion VC, with HSBC and ING Ventures also participating as new investors. The firms join existing shareholders Citi, Illuminate Financial, Commerzbank’s Main Incubator group, and The FinLab.
Speaking to The TRADE, TransFICC founder Steve Toland explained that the evolving fixed income market structure means that banks like Citi, HSBC and ING need to access more venues, but this poses major challenges due to differences in workflows. The firm’s clients currently include five global investment banks and one market data vendor.
“We have different workflows coming through from venues like Bloomberg and Tradeweb, whether that’s list trading or portfolio trading, but that buy-side flow is now being automated so the sell-side needs to adapt,” Toland said. “Banks need to connect to different venues to support new trading types, and they also need to ensure their liquidity is directly accessible to some clients. The infrastructure has to be more flexible, scalable and adaptable.”
The TransFICC ‘one API for e-trading’ platform aims to help the sell-side with challenges around the increasingly fragmented nature of fixed income markets, as Toland added each bank looks to connect with between 35 and 75 different trading venues. It allows firms to connect to venues and supports various workflows across rates and credit bonds, and more recently interest rate swaps.
The funds raised in the recent investment round will be used to accelerate TransFICC’s existing plans to scale up and support more trading venues. Although some of the funds will also be used to launch a buy-side version of its platform, following an uptick in interest for TransFICC’s connectivity services from asset managers – this year particularly.
“That has been driven by increased automation, portfolio trading mostly, and essentially, you need those automated trading types because they are far more efficient. But it’s also the impact of the long-term regulatory requirements for asset managers. Those on the repo side for example will be held to SFTR, so there’s a requirement to build automated electronic trading systems.”