Goldman Sachs led a group investing in the provider of a unified pre-trade decision-making and post-trade compliance analysis tool.
Droit Financial Technologies, an over-the-counter (OTC) derivatives trading systems vendor, is expanding operations to foster the acceptance of its real-time, decision-making engine for point-of-execution compliance.
This is possible because of a $16 million, Series A minority investment via Goldman Sachs, Pivot Investment Partners and Wells Fargo. A principal trading firm, DRW, also participated in the investment roundup.
Droit will be applying those Series A funds toward its compliance platform, ADEPT, and to support the expansion of the vendor’s operations globally, including the forthcoming opening of an office in Singapore and a rapid expansion of the sales, support and marketing teams, officials say. The vendor has offices in New York and London.
The platform from the four-year-old company attempts to unify pre-trade decision making in the front-office and post-trade compliance analysis with a common infrastructure, data and logic, officials say. ADEPT supports more than 12 global regulatory regimes, including all G20-aligned regimes such as Dodd-Frank and the European Market Infrastructure Regulation (EMIR) act. Support for the Markets in Financial Instruments Directive II (MiFID II) will be coming later this year.
The vendor’s regulatory frameworks are unified and managed within a single infrastructural solution to facilitate pre-execution eligibility and post-execution compliance, officials add. ADEPT layers over existing trading and compliance infrastructures, according to a spokesperson answering questions from FTF News.
The ADEPT system has three different integration points, the spokesperson says. It can be directly integrated into e-trading backbones at point of RFQ to process trades in real time. It can also work with a pre-execution sales inquiry, credit-checking systems and traditional trade capture platforms. All real-time, post-trade and EOD violation reports can be integrated with internal case management tools, officials add.
Vendor officials say the ADEPT platform aims to provide execution across jurisdictional guidelines on a timely basis by producing thousands of automated trading decisions per second, officials say. The ADEPT system also helps clients stay current with regulations and market microstructure across their entities, counterparties and geographies.
Six banks are using ADEPT and two to three more are expected to sign up by the end of this year, officials say. In addition, Droit officials also project that 15 of the 20 largest dealers will be on-boarded, along with five buy-side firms by end of 2017.
Goldman Sachs officials confirm that the investment banking giant is not only investing in the ADEPT system but is a user of Droit systems. “The company’s success in creating its ADEPT platform gives the company an excellent opportunity to become the industry standard for regulatory-compliant decision engines, and we look forward to our continued cooperation,” says Joanne Hannaford, managing director, technology at Goldman Sachs, in a prepared statement.
Don Wilson, CEO of DRW, and Dinkar Jetley, co-founder of Pivot Investment Partners (and former CEO of Worldwide Securities Services at J.P. Morgan Chase) both confirm their investment in Droit.
The vendor’s investors “fully recognize the mandatory requirements of all trading firms to meet a vast, complex and constantly evolving array of global regulations and understand our business from the strategic perspectives of centralization, standardization, transparency and efficiency,” says Satya Pemmaraju, CEO of Droit, in a statement.
Droit was founded in 2012 by derivative traders, quants, ecommerce specialists and technologists with a mission to “provide a robust, enterprise-wide infrastructure that facilitates compliant and optimal trading of derivatives across asset classes,” according to Droit officials.
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