QuantHouse, which develops software for low-latency market data delivery and alpha generation, has added a connectivity offering. Although the addition of the QuantLINK service enables QuantHouse to offer a product which combines its market data delivery, proximity hosting and global order routing, it remains to be seen whether it will bring in new customers or just keep existing ones happy.
QuantHouse, which is headquartered in Paris with offices in London and New York, was founded in 2003 to develop technology, primarily for the buy side. Its first product was QuantFEED, which is really a ticker plant/feed handler offering for capturing, normalizing and distributing market data, where it competes with the likes of Wombat (now part of NYSE) and ACTIV Financial.
At the beginning of 2007 QuantHouse expanded into alpha generation platforms, i.e. technology that enables automated quantitative strategy development, through the acquisition of a company called SmartQuant, whose technology is now called QuantFACTORY.
Now it has added a third dimension, namely connectivity on its fiber network, a service it calls QuantLINK. This may appear to be something of a departure from its core business to date, but the rationale is actually quite a logical one, in that the hedge funds’ order floors that make up the bulk of its QuantFEED customers have until now had to rely on brokers’ infrastructure to carry out their trades.
However, QuantHouse had already built its own fiber network for delivery of market data, so some of these customers began to ask QuantHouse to come up with an offering to extend its capabilities on the execution side. To this end, it partnered with a couple of brokerages to host their execution platforms at its data centers and now offers the connectivity under its own auspices.
It remains to be seen whether QuantLINK will drive a lot of new customers to QuantHouse’s door or merely make its existing QuantFEED customers happier. It’s certainly an interesting strategy, considering that Reuters divested its own extranet offering, Radianz, to BT in 2005. Still, Reuters comes at the market from a very different place and may have felt it needed to focus more intensely on its software development activities, rather than running a network.