Our Investment in FX HedgePool: Plunging into Liquidity Pools
Information Venture Partners is pleased to announce its $5M Series A investment in NY-based capital markets deep tech company FX HedgePool.
Foreign exchange (FX) hedging is a deep and complex world of boring but voluminous transactions. When buy-side players need to hedge their FX risk today they traditionally look to derivatives products knows as FX swaps, whereby two parties on opposing sides of the exchange rate agree to a future rate, brokered by intermediary banks. FX Swaps represented an average of US$3.2 Trillion of derivatives daily trading volume in 2019, a number which continues to grow as the demand for globally diversified investment products such as exchange traded funds increases.
Until now, the hedging process has been seen as a tedious and repetitive function of buy-side firms, akin to mowing your lawn every Saturday or balancing the chemicals and cleaning your pool – it’s a time-consuming task that simply must get done. For banks who broker these trades it’s a non-alpha generating function whereby they provide nearly free services to buyers in hopes that it strengthens their relationships. A marketplace like this has been ripe for disruption for decades.
Enter FX HedgePool
The world’s first peer-to-peer matching venue for FX swaps founded in 2019 by Jay Moore and Emin Tatosian. Jay is a well-known name amongst currency managers. He served as State Street’s Head of Currency Management for 14 years and later as SVP of Currency Administration at Brown Brothers Herriman for another 7 years. His work led him to discover the opportunity for buy-side participants to match liquidity directly, an idea which has been gaining popularity amongst global asset managers of all sizes. When Jay met Emin, a member of the Forbes technology council with 10 years of specialization in capital markets tech, the pair quickly realized they had a unique opportunity to build something amazing together.
The management team is rounded out by capital markets veterans, including Head of Finance and Operations, Townsend Smith, who brings 20+ years of GRC and operational experience from Brown Brothers Herriman to the team. With this raise and their rapidly establishing reputation as a major player in the capital markets tech space, FX HedgePool is looking to continue building out their talented global team.
This buy-side led revolution isn’t ruffling feathers of intermediary parties either. By maintaining the bank’s role of provisioning credit for swaps contracts, FX HedgePool has created a win-win whereby all parties are able to reap the benefits of this market innovation. With their proprietary swap matching engine and plans to expand matching services into broader currency pairs, non-deliverable futures, and spot, FX HedgePool is looking to capitalize on their early successes and become the premier technology provider focused on enabling buy-side innovations in FX markets. With some of the top global asset managers already using their products, the sky is the limit for the New York-based company.
Looking to the Future
Our team recognizes the massive potential of introducing peer-to-peer matching and automation to the global FX market, an under-innovated slice of financial services. With big early wins and proven product market fit, the Series A financing round will help grow the team and expand product offerings in an effort to make FX HedgePool the clear global market leader in peer-to-peer matching for buy-side firms. The platform is gaining momentum and attention at a time where market participants are demanding innovation to core capital markets infrastructure, which few technology providers are addressing.
We are thrilled to be working with Jay, Emin, and team and supporting the vision that they have for the future of FX trading. Their hard work until now is evident in the success they’ve had, and we look forward to supporting them as they accelerate into this next phase. We’re ready to dive in head-first!
– Dave, Aman and the Information VP Team
Full article at Information Venture Partners