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Israeli Startup Correlix's Technology Selected for Direct Edge Exchanges
Correlix Ltd., the Israeli startup whose software monitors the speed of transactions on financial exchanges, said its RaceTeam technology was chosen by Direct Edge Holdings LLC for the new EDGX and EDGA exchanges.
The company is “working on a few other large deals with other exchanges,” Shawn Melamed, founder, president and chief technology officer, said in a phone interview from New York. European bourses are expected to be added as customers next year, he said. The company added Nasdaq OMX as a customer in November.
Melamed declined to disclose the value of the Direct Edge deal or financial information for New York-based Correlix. Direct Edge, which is majority owned by International Securities Exchange, Goldman Sachs Group Inc., Citadel Investment Group LLC and Knight Capital Group Inc. has daily U.S. cash equities volume “routinely exceeding” 1 billion shares, according to a press release.
Financial firms spent about $15 billion on data centers in 2009, with most of the money driven by a need to reduce delays, Tabb Group, a Massachusetts-based markets research company, said in a June report. Correlix software helps exchanges quickly fix problems in transaction speed and provides information to let brokers decide how to trade for the maximum benefit, Melamed said.
Growing Market
The market for the kind of tool Correlix offers has grown considerably over the last three years, according to Kevin McPartland, an analyst for Tabb. Another boost for the market may come if regulators insist on transparency in the area of latency, the time it takes for an order to travel to an exchange, be executed or canceled, and then for the confirmation to reach the source.
“There was a lot of talk on that a few months ago,” McPartland said. “This technology is creating more transparency on how markets work and interact with one another.”
As the market for these monitoring tools heats up, competitors such as Corvil and other technology providers are increasing their market data or high-speed connectivity offerings, he said. Corvil customers include the Chicago Mercantile Exchange, NYSE Euronext, the London Stock Exchange and Deutsche Borse Group, according to its website.
Correlix, which also has offices in London and Herzliya, Israel, is backed by Sequoia Capital Partners, Genesis Partners, Blumberg Capital and others.
To contact the reporter on this story: Gwen Ackerman in Jerusalem at o gackerman@bloomberg.net;
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