Financial News: Former City trading rivals sign cryptocurrency tech pact

September 6, 2018

By Samuel Agini

Alasdair Haynes’ Aquis Exchange agrees to provide trading and surveillance technology to startup Archax

Aquis Exchange, a challenger to the City’s largest trading venues, has scored a win for its growing technology business with a mandate to power one of a new breed of cryptocurrency markets.

Aquis, founded by trading veteran Alasdair Haynes, will provide the technology to allow buyers and sellers of cryptocurrencies and tokens to be matched on Archax, an exchange that plans to go live in the first half of 2019, the companies said in a statement on Thursday.

Archax pitches itself as a digital-asset exchange for institutional investors. It was founded by hedge fund managers formerly at Omni Partners and counts David Lester, ex-strategy chief for the London Stock Exchange, as a senior adviser.

Haynes and Lester used to be rivals. Haynes led trading venue Chi-X Europe [now part of Cboe Global Markets] from late 2009 until 2012, while Lester chaired the LSE’s Turquoise platform, a competitior to Aquis, until his departure last year.

But the agreement is the latest sign of how financial institutions in the UK are coming together to build a more sophisticated infrastructure for the trading of digital assets, despite continued scepticism from in the industry who believe cryptocurrencies are vulnerable to hackers and fraudsters.

Under the terms of the three-year pact, Aquis will also provide Archax with surveillance and post-trade assistance.

Haynes said: “We have been approached by many firms wanting to use our technology in the crypto space. The Archax team, however, bring the extensive experience from traditional regulated markets that we believe is needed to launch a successful crypto exchange for institutional use and we and very pleased to be working with them.”

Graham Rodford, Archax chief executive, said: “We believe that using a regulated MTF [multilateral trading facility] operator to run our core matching engine, as well as leveraging Aquis’ market surveillance team, will also fast track our time to market.”

The agreement comes just months after Aquis listed its shares in a £32m-plus initial public offering. Since then, its share price has risen almost 60% to 427.50 pence. The value of shares traded on Aquis hit €21.7bn in August — a record for the group.

Although best-known as a trading venue, Aquis has been growing its technology business, having already agreed to provide surveillance and reporting technology to a venue run by UBS, among other deals.

Aquis distinguishes itself from other exchanges by operating a subscription model for trading, similar to the way mobile phone network providers charge for data. Rivals tend to take a cut of the volume of shares traded. Its major shareholders include former Barclays investment banker Rich Ricci, trading firm XTX Markets, and heavyweight fund managers including AXA, Invesco and Schroders.

Archax will initially have exclusive use of Aquis’ technology for the trading of digital assets. It will pay an
upfront implementation charge and a recurring licence fee upon launch.

To contact the author of this story with feedback or news, email Samuel Agini