SBI Invests in High-Speed Broker Potamus

Potamus, founded in 2012 and based in Boston, runs a low-latency, co-located trading platform targeted towards buy-side firms with large volume orders. It provides algorithmic execution and transparency to clients. The broker-dealer notes its aim with the platform is to cut down on execution costs.

Potamus would not disclose terms of the investment, but managing partner and chief technology officer Paul Govereau tells WatersTechnology that SBI approached them.

“SBI saw what we were doing with our platform and approached us,” Govereau says. “This investment definitely helps us to build out our US business and to potentially expand into other regions and asset classes.”

Govereau adds the platform is designed to bring large orders to the market while minimizing information leakage so clients can have both speed and processing power for vast amounts of data.  SBI president and chief executive officer Yoshitaka Kitao said in a statement SBI is confident the investment “underscores our commitment to bringing financial innovation to the equity markets worldwide.”

Potamus’ platform is interconnected to large exchanges like Bats, Cboe, and Nasdaq. Kristin Linnell, managing partner, chief compliance officer, and chief financial officer of Potamus, says SBI’s investment will certainly help the company grow but ambitions to expand into other regions are still in the long-term.

“Our current clients ask us about offering our services in other regions in which they also trade, so we do have a motivation to expand our business into trading in those regions down the road,” Linnell says. “SBI may be helpful to us if we do decide to expand in that way, but our first focus is on succeeding where we are, and then growing from there. Expanding into other regions is definitely in the long-term plan.”

The high-frequency trading world has had a tumultuous few years. Recently, several firms were acquired including Virtu’s purchase of KCG for $1.4 billion in April 2017, Hudson River Trading’s acquisition of Sun Trading in January 2018, and DRW Holdings’ purchase of Chopper Trading in 2015, pointing to a level of consolidation in the sector, although direct investments are often not publicized.