Our Investment In A Fair and Intelligent Alternative Trading System – OneChronos, The Smart Market for Institutional Investors

By Brent MacDonald – Principal at Rising Tide

NYSE, NYSE American, NYSE Arca, and NYSE National Now Route Directed Orders to OneChronos ATS

OneChronos is a new Alternative Trading System (ATS) for U.S. equity markets created from the ground up, leveling the playing field for investors & traders by removing speed-based incentives from how orders are prioritized to be matched, fostering competition on the quality of potential trade outcomes, and optimizing for trade execution quality outcomes. The U.S. sees daily stock trades of around $600 Billion, one of the world’s largest and most liquid marketplaces. Over 30 brokers, representing hundreds of institutional asset managers, order multiple billions of dollars to trade at OneChronos each day and enjoy superior execution quality for their trading activity. As a result, OneChronos is among the fastest-growing ATSs, with trading volumes increasing by over 50% each month.

Other trading venues match orders using auction formats that predate modern theory and computational capabilities. Today’s market structure traces its roots to human auctioneers facilitating physical commodities trading. The needs and use cases of today’s capital markets trading community are materially different and increasingly automated and electronic. The technology underpinning OneChronos’ mission operates “Smart Market” mathematical optimizations ten times per second throughout the trading day, with each auction optimizing for trade execution quality outcomes that modern economic theory and most traders agree on. OneChronos Smart Markets offer an optional set of user tools to target specific trading objectives and avoid unintended risks, such as trading an order only when the public quote in that stock is “stable,” trading a pair of stocks only when the “spread” between them exceeds a certain level or trade a basket of stocks only when they are sufficiently uncorrelated. These easy-to-integrate tools empower brokers and their clients to achieve improved fidelity throughout the trading workflow stack, resulting in better trade quality. The tools also allow users to express indifference (I would buy 10,000 shares if the quote is very stable OR 7,000 shares if it’s moderately stable) and substitutes (I would be happy to buy up to $50,000 of Apple OR Microsoft), which expand the pie of possible trades that can occur, amplifying trading opportunities for market participants.

Smart Markets at the speed, scale, and resiliency required of electronic capital markets weren’t possible until now – OneChronos pioneers the technology and machine learning techniques to make it happen. The opportunity for the Company is even more significant when considering that the technology can bring similar improvements to other financial markets and regions that share similar properties and challenges, such as European equities, derivatives, and foreign exchange, including cryptocurrencies. Additionally, utilizing a unique pipeline to the New York Stock Exchange (NYSE), any subscriber to the NYSE can trade on OneChronos with almost zero barriers to entry, increasing adoption.

BMO, Jefferies Financial Group, and many other top-tier broker-dealers signed onto the OneChronos platform over the past few months, more here. The founders and management of the Company have substantial experience in building innovative marketplaces, quantitative trading, and technology leadership in global equities and fixed income from their positions at Goldman Sachs, Merrill Lynch, Accenture Consulting, and Crabel Capital Management.

OneChronos, a Y Combinator alumnus, has raised $20 Million in financing. The Company is investing the money in expansion efforts so that its technology may be applied to more regions and asset classes. Rising Tide is pleased to have been an early investor in this ground-breaking auction-matching technology, having made its first initial investment in OneChronos in September 2016.

 

Finally, A Financial Exchange that Significantly Lower Trading Costs and Complexity!

See OneChronos film here: click ‘Watch Video’