Illuminate Invests in ‘Big Data’ Firm

Shanny Basar

Illuminate Financial Management has invested in TickSmith, which develops big data applications for capital markets, and has an initiative with CME Group to improve access to the US exchange’s historical data.

TickSmith said in a statement it had received a strategic investment of CAD$2m ($1.6M) from the venture capital firm which focuses on capital markets financial technology, to further commercialise its flagship product TickVault. The firm describes TickVault as a financial data lake platform for capital markets, which centralises data from external and internal data feeds and enables API access to data-intensive applications.

CME Group and TickSmith announced an initiative in October last year to improve access to the exchange’s historical data by implementing TickVault. The exchange has more than 450 terabytes of historical market data, some going back to the 1970s, which includes market depth, end of day and block trades.

Marc-Andre Hetu, TickSmith chief technology officer, said in a statement: “To be usable, data has to be instantly accessible regardless of how much data is involved. With TickVault, data users can browse a data catalog, subscribe to the content and access it via web interfaces and APIs instantaneously.”

The quantity of financial data that must be aggregated, normalised and stored is expected to grow as electronic trade volumes increase.

Mark Beeston, managing partner at Illuminate Financial Management, said in a statement: “Data is taking the centre stage in capital markets. Consolidating high quality data and making it easily accessible is crucial throughout the whole trade lifecycle.”

Consultancy Capgemini predicted in a study that one of the top ten trends in capital markets in 2017 is data management and analytics evolving into a strategic function and becoming an increasingly critical element for capital markets participants. Firms need to analyse vast amounts of data from different sources across market participants as they try to identify investment ideas and trends.

“Analysis for trading strategies (scanner algorithms), high-frequency trading information analysis, pre-trade analytics, and sentiment analytics are a few of the areas that are witnessing the most activity from market participants in terms of investments in technology,” said  Capgemini. “Firms are also exposed to recurring audits and face a risk of incurring huge fines for not complying with their data vendor and exchange contracts.”

Francis Wenzel, chief executive and co-founder at TickSmith, said in a statement: “Market participants recognise the competitive advantage that can be gained from a next generation capital markets data lake, not just in Europe and North America, but increasingly on a global basis.”

Mark Whitcroft, founding partner at Illuminate Financial, said on a panel this month that the biggest regulatory driver is MiFID II, which will cover financial markets in the European Union from January 2018. He said: “Since the financial crisis the drivers in capital markets are cost, capital, controls and compliance as there is zero tolerance of regulatory failures.”

TickVault can provide a a single source of data for compliance with new MiFID II post-trade reporting and risk requirements.

Capgemini added that compliance and effective risk management are the biggest immediate challenges facing firms as new regulations come into force and spending on compliance technology will increase.

“Complying to dynamic regulations means firms must design a variety of data groupings with multiple hierarchies (including on existing data) about all historical financial data available to them for regulatory access in the future,” said the consultancy. “The need arises to have the ability to manage huge amounts of data and use analytics to process vast amounts of structured and unstructured data.”

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