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Chi-X Buys Cicada, Enters Exchange Technology Business
November 18, 2008
Trading platform operator Chi-X Global, a subsidiary of agency brokerage Instinet, has purchased data management and trading technology supplier Cicada Corp. In conjunction with the deal--terms were not disclosed--Chi-X is starting an exchange technology business.
The new unit, Chi-X Global Technology, will be headed by Gregory Smith, founder and chief executive of Oklahoma City-based Cicada. Chi-X, which runs venues in Canada and Europe--a third is awaiting regulatory approval in Australia--is retaining all the business assets and 75 employees of Cicada, which has offices in New York, London and Hong Kong.
“Market centers around the world are today working to build out their trading infrastructures in order to accommodate the global trading community’s demand for low-latency, high-capacity, scalable systems,” said Tony Mackay, CEO of Chi-X Global. “Cicada has proven that it is one of the handful of firms in the world that has a development staff capable of partnering with some of the world’s biggest exchanges to help deliver this. We think Cicada is an extremely complementary fit with our business.”
Composer, the flagship product of Cicada, which opened in 1998, offers a data management infrastructure that lets clients acquire, validate and clean information from multiple sources, which can then be distributed to downstream applications, repositories and third-party vendors. The company’s Profiler solution helps firms manage customer information and fulfill their due-diligence obligations under anti-money-laundering and know-your-customer regulations.
Earlier this year, Cicada rolled out MarketPrizm, a technology and connectivity platform designed to help firms trade electronically in the fragmenting European Union equities market. Delivered on an application service provider basis, MarketPrizm provides low-latency market data and order book data from every venue on which customers trade. Nasdaq OMX Group’s London-based multilateral trading facility (MTF) is using MarketPrizm to supply market data from other platforms to its routing-broker and proximity-hosting customers.
Mackay, who cited Cicada’s work with “a number of global exchanges,” said that the initial focus will be on integrating the vendor’s development team with Chi-X’s and getting the technology services division off the ground. “There is a significant demand for these types of services,” he said. “We think that with Cicada’s talented development staff we are now poised to be a real leader in this space.”
Instinet, a New York-based subsidiary of Nomura Holdings, formed Chi-X Global earlier this year as a parent company for its alternative trading systems. Chi-X Europe, which launched in March 2007, executed more than 26 million trades in the third quarter, compared to 12.6 million in the previous quarter. Its Canadian ATS began operations in February. In addition to a pending platform in Australia, Chi-X has a presence in Hong Kong and has noted the potential for further expansion in Asia.
“Chi-X’s technology has proven to be robust and scalable and has been instrumental in the early success that the platforms have seen in Europe and, increasingly, Canada,” said Cicada’s Smith in a statement. “With this acquisition, Chi-X will be able to continue to innovate with technology advances while expanding its business into new areas by serving the technology needs of exchanges, MTFs and users of these trading venues globally.”
Transatlantic exchange giants Nasdaq OMX and NYSE Euronext have both placed an emphasis on their technology businesses. Nasdaq--through its acquisition of OMX--supplies dozens of exchanges around the world with trading platforms. NYSE, whose Euronext arm has also long provided exchanges with platforms, in March introduced a commercial technology business.
