Clear Street, a New York-based independent prime broker, has entered the futures clearing market by acquiring React Consulting Services and its cloud-native futures clearing platform, BASIS.
The acquisition of React closed on June 28, according to Sachin Kumar, Co-Founder and Chief Technology Officer of Clear Street.
The expansion supports Clear Street’s plans to expand its reach across new markets and asset classes, accelerate future product offerings, increase availability to all market participants, and offer solutions for clients looking to migrate to a single-source platform, he told Traders Magazine.
“The acquisition of React accelerates Clear Street’s product development timeline in the futures clearing business and supports the expansion of our comprehensive suite of services,” he said.
BASIS will be integrated into Clear Street’s existing cloud-native clearing, settlement, execution, and custody platform.
Full integration of BASIS (React’s proprietary, cloud-native futures back-office clearing platform) will be phased, as the company plans to connect the platform to futures exchanges starting in early 2024, Kumar explained.
BASIS is React’s proprietary, cloud-native futures back-office clearing platform that uses a modern architecture similar to Clear Street’s, he said.
“With the integration of BASIS, Clear Street’s platform will offer clients everything they need to clear, custody, and finance U.S. equities, options, fixed income, and futures,” he added.
According to Kumar, the React team brings decades of experience and valuable expertise, and will be solely responsible for integrating BASIS into Clear Street’s platform.
When asked about trends in the futures clearing market, Kumar said there is greater acceptance of and movement toward cloud computing.
“With recent cybersecurity-related events in the financial software services sector, there is increased discussion among firms and regulators around vendor concentration risk and the need to find viable alternative solutions in order to diversify and mitigate vendor risk,” he said.
“Being able to offer clearing software that can cover multiple assets is a key consideration when firms look for alternative solutions,” he added.
He further said there is also a growing demand for real-time data and advanced vendor integrations.
“Waiting for the end of day batch cycle is becoming less acceptable,” he argued.
Kumar stressed that Clear Street remains focused on its mission to become a single-source platform that serves a variety of investor types, across multiple asset classes, on a global scale.
Clear Street’s prime brokerage platform currently processes more than 2.5% of the gross notional U.S. equities volume, which is $15 billion in daily notional trading value of U.S. equities and competes with some of the biggest players in the financial industry.
Kumar said that the firm plans to expand its reach across three dimensions: Asset classes, Geographies and Customer personas. He said that Clear Street has recently expanded into fixed income and over the next 12 months plans to expand their asset class offering to Delta 1 and other Derivatives.
In terms of geographies, the firm is broadening its reach overseas in the UK and opened a registered broker-dealer in Canada to bolster their presence in North America.
“We’re rapidly building capabilities for more asset classes, geographies, and investor types and look forward to continuing to expand our team and resources to meet our goal to give all market participants, from emerging managers to large institutions, the tools and services they need to compete in today’s fast-paced markets,” he concluded.
