The marching orders for Mantara’s new chief executive officer are clear: Take what the firm believes is a strong product and put it in the hands of more customers.
Michael Chin this week assumed the reins as president and chief executive of Jersey City, N.J.-based Mantara. The vendor provides low-latency connectivity, market data feeds and risk-check technology for high-frequency trading firms. It also offers an execution management system.
The market for high-frequency technology continues to grow. Accordingly, Mantara expects to grow alongside it, said Chin, who spent nine years at the EMS developer TradingScreen.
"We’re well-positioned," Chin said. "My mandate now is to really grow the client base significantly."
The firm’s client base is growing, he said, doubling in the last 12 months. A year ago, Mantara had 10 clients and 120 users, Chin said. Today, it has 20 clients and 250 users. He would not estimate how many clients the privately held firm expects to have 12 months from now. Mantara’s client base is evenly distributed across black-box hedge funds, proprietary trading shops, agency brokers and large brokerage firms.
For its first three years, Mantara’s focus has been on building a strong product for high-frequency traders, Chin said. Now the main focus is sales and distribution, he added.
But the growth in HFT-related technology comes at a time of great regulatory scrutiny. The Securities and Exchange Commission is looking closely at HFT practices and trying to determine whether they pose risks to the marketplace after the May 6 "flash crash."
The high-frequency trading business falls into Mantara’s product sweet spot: market connectivity and risk checks. Chin said he isn’t worried about the SEC’s Jan. 13 rule proposal on sponsored access. In it, the SEC said it wants to effectively ban the practice of "naked access" by requiring broker-dealers who let customers trade directly in the markets under their names to vet each order on a pre-trade basis. The SEC wants the industry to check every order before it is sent out, to make sure none is erroneous or outsize.
In the wake of the SEC’s rule proposal on sponsored access, trading infrastructure vendors and exchanges have been racing to develop their risk-monitoring capabilities for potential clients–namely, broker-dealers and hedge funds involved in high-frequency trading.
Mantara is ready for any eventuality, Chin said. If pre-trade risk checks are required, its pre-trade risk management tool has more than 40 parameters that can be customized, he added.
Chin said his firm is prepared for whatever the SEC decides, whether brokers are required to have more risk checks in place or whether naked access is allowed with increased capital requirements. "It doesn’t make a difference to us," Chin said. "Either way, people are going to need flexibility and are still going to look for low-latency. And our technology is flexible to either outcome."
To add an additional risk check, there’s an impact on the latency. Based on the way Mantara built its platform, there is a delay of between one and two microseconds for each additional risk check, on average, Chin said. The firm has identified about 12 risk checks that are most likely to be required if the SEC’s rule is passed.
During Chin’s nine years at TradingScreen, he held several executive management positions. His predecessor at Mantara, David Gilbert, becomes executive chairman at the firm.
Chin saw the move as a challenge comparable to the one he undertook at TradingScreen during a period when EMS technology evolved and expanded across the industry. He expects a similar boom for the kind of back-end technology that high-frequency trading firms use.
His experience at TradingScreen is one of the reasons Mantara brought Chin aboard, according to Richard Schenkman, a member of the Mantara board of directors and a former executive at both Instinet and BRUT ECN. He liked Chin’s familiarity with building a business, as well as his trading background. Before TradingScreen, Chin held a number of management positions in global trading during his 13 years at JPMorgan.
"We see that [Chin] can take us to the next level in the market, with the client and in his network," Schenkman said. "And he’s experienced in building a business; it was a perfect fit for us."
