Preps Integration, International Expansion
New York-based agency broker and trading infrastructure provider Pico Quantitative Trading has acquired Chicago-based ticker plant, feed handler and historical data store vendor SpryWare, in a move to strengthen its data technology assets and expand its capabilities.
Officials say the two companies closed the deal on March 19 for an undisclosed sum. The combined company will have a total of around 52 staff - mostly among network engineers, developers and support staff - and will combine SpryWare's technology operations in Chicago with Pico's smaller presence, and move SpryWare's small New York office into Pico's headquarters in the city. SpryWare co-founder Daniel May will leave following the transition to Pico, while co-founder Michael Kreutzjans will become a director at Pico to help grow its business.
Following the acquisition, Pico will combine SpryWare with its existing technology, data and analytics assets under a new division, dubbed Pico Technology Solutions, reporting to Picofounder and chief executive Jarrod Yuster. However, the move will not see Pico abandon its separate agency brokerage business to become a pure technology provider, as some observers suggest. "We will continue to support and grow our agency broker-dealer business. However, the demand for our technology products and services right now is quite strong [that] business is thus growing much faster," Yuster says.
Pico has already been providing raw data to SpryWare's clients for around 16 months, Yuster says, resulting in last year's partnership that provides Pico's clients with access to SpryWare's technology (IMD, Sept. 16, 2013). Pico also has partnerships with numerous other technology providers to provide a full range of solutions available to clients via its infrastructure and co-location sites. "We have a very tight partnership, and it became a natural fit to have them become part of our firm," he adds.
The acquisition gives Pico ownership of SpryWare's solutionsâï¿½ï¿½its Direct Market Server feed handler and ticker plant solution that creates a normalized feed of exchange data with processing latency of less than 10 microseconds, as well as its HDS OnDemand historical data store that can be used to capture tick data from equities, futures and options exchanges to support algorithmic trading strategy development and back-testing, and SpryWare's Proximity Cloud service that provides hosted access to DMS and HDS within a managed services environment. For example, Pico will be able to integrate its historical datasets into HDS to create a full-service tick data product.
The deal also gives Pico a bigger development and support staff already familiar with each other's products. "In this environment, product is important, but support is paramount, and is a differentiator. We're an engineering and support organization, and SpryWare has also been very client- and support-centric," Yuster says.
Pico now plans to make SpryWare's services available in all of the 11 datacenters across North America that house its current trading ecosystem-whereas SpryWare currently offers its services from only two datacenters.
"With our footprint of datacenters and our network mesh, we can... create high-output, high-throughput ticker plants in each location," improving latency and efficiency, while eliminating the need for clients to deploy dedicated hardware, says Bruce Boytim, managing director at Pico in Chicago.
In addition, Pico plans to grow and expand SpryWare's product coverage and bring more of its services to Pico's clients. Initially, this will include support for US and Canadian foreign exchange and fixed income market data in addition to its existing coverage of US equities and options, and incorporating access to historical data and corporate actions into SpryWare's API.
Stretching into the third quarter of this year, Pico also plans to expand its business internationally to provide clients with data from European markets, and expand SpryWare's feed handlers to support European data, in response to demand from US clients for access to futures and FX data from Eurex and Liffe. "We have a small European presence, but are about to expand on the infrastructure side. We will have the infrastructure and data capture, and SpryWare will write feed handlers to integrate the data into its API," Yuster says, adding that this process should be straightforward because SpryWare already supports a multitude of development languages and operating systems.
The acquisition also changes the competitive landscape in which Pico operates, from competing primarily with pure infrastructure providers to competing directly with low-latency software vendors. Yuster doesn't rule out other acquisitions to further strengthen Pico's technology business in the future. "Certainly we will be looking for other opportunities... but we are now focused on completing this integration," he says. "We also see opportunities to grow our other partnerships, because they make us more valuable in terms of our ability to provide solutions to clients."