Illuminate Financial has completed its second RegTech deal in as many months by backing UK-based startup TransFICC.
The investment comes as RegTechs are seeing a demand for their products increase as the deadline for Mifid II approaches. TransFicc, which looks to address fragmentation in fixed income markets, has secured €1m in early stage investment from Illuminate Financial and Commerzbank fund Main Incubator.
The company, which was founded by former LMAX executives, provides banks and asset managers with an alternative to maintaining connectivity to multiple e-Trading venues, offering a unified low-latency, robust and scalable API. It enables financial institutions to access their required eTrading venues, while streamlining technology requirements and reducing operational costs according to its website.
TransFICC founder Steve Toland said: “Banks and the buy-side have already shown significant interest in how TransFICC enables organisations to quickly and easily connect with the highly fragmented Fixed Income and Derivatives markets. We look forward to working with our investors, leveraging their knowledge of capital markets and extensive industry connections, to acquire new clients and connect to further trading venues.”
The investment will be used primarily to expand the development team as they prioritise connectivity to the 40 fixed income trading venues they are adding to service their first customers. The company recently joined The FinLab accelerator programme in Singapore, established by United Overseas Bank Limited and SGInnovate.
RegTech Rising
According to data by FinTech Global, Global RegTech investments have more than tripled over the last five years, with London establishing itself as the global leader in RegTech deals.
Last month, Illuminate made an investment in dv01, which provides reporting services for more than $10bn of marketplace securitizations, alongside OCA Venturs and Ribbit Capital.
Illuminate partner Mark Beeston told FinTech Global:“By far the biggest issues are the need for transparency and provision of best execution for clients. To archive this you really need multi-venue connectivity via the venue’s respective API’s.”
However, coding these differing APIs is both complex and costly to maintain. Banks typically three months to code a single new API and a large regional bank will want to connect to 25-30 trading venues across bonds, swaps, futures, and repo, according to Beeston.
“TransFICC ease that technical burden by translating the differing APIs to a single ‘one API’ format because it’s a hosted service it also means that most api upgrades can be”, he added.
“The Multi-jurisdictional regulatory challenges’ facing the industry was one of the prime drivers for establishing Illuminate. Around 60 per cent of the 1400 or so companies we have seen list at least one regulatory rule set as something they are addressing. If you look across the nine companies we are invested in at least six of them are addressing some regulatory change as part of their solution.”
Illuminate’s portfolio also includes Cloud Margain, Chart IQ, Privatar, FeedStock, Axe Trading, TickSmith and RegTek Solutions.
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Copyright © 2018 RegTech Analyst
