Transforming the brokerage ecosystem and capital markets through a cloud-native platform: this has been the operational motto of the New York-based Clear Street, a financial venture which finds its mention in today’s episode of the “Start-up of the Week.”
“Clear Street is the product of founder pain and the solution to a decades-old problem. It was founded by industry experts. They experienced the difficulties with limited access and missed opportunities caused by operating on outdated infrastructure,” mentions the company.
Tracing The Venture’s Growth Path
Established in 2019, Clear Street is all about combining highly skilled product and engineering talent with seasoned finance professionals. It works with the principle of ensuring faster, reliable and instant access to brokerage and capital market-related data for the clients.
“Markets are moving faster than ever. Infrastructure needs to move with it. We make around 6,000 updates to our platform each year and are constantly refining our processes to help you move with today’s fast-paced markets,” stated the venture, which uses its cloud-based technology to onboard an institutional client in 14 days.
After its inception in 2019, Clear Street initially started serving prime brokerage clients through invitation-only methods, apart from offering institutional-quality trading and execution, securities lending, margin financing and processing trades of US equities through the venture’s clearing and custody platform.
Even in 2020, the year which saw the outbreak of the COVID pandemic crippling the global economy, Clear Street continued its march, as it finalised the acquisition of a broker serving sophisticated traders to seed platform growth, apart from delivering over 500 product updates including support for US options. In the same year, it also received regulatory approval to offer portfolio margin financing to clients.
In the following year, the start-up touched the milestone of handling over USD 3 billion in trades on an average trading day, apart from adding another 120+ employees to support rapid client growth and product development. It also grew client equity on its digital platform to a total exceeding USD 1.5 billion.
In 2022, Clear Street launched its fixed-income repo business with the build-out of a senior team, apart from expanding its prime brokerage sales team further, along with raising USD 165 million in a Series B funding round, thereby bringing its valuation to USD 1.7 billion.
Last year, the start-up received a strategic investment from IMC Investments, the venture capital arm of global market maker IMC. It also raised USD 270 million in additional Series B funding, increasing to USD 435 million, thereby breaching the valuation mark of USD 2 billion. It has also made strategic hiring in its investment banking division, while acquiring a cloud-native futures clearing platform, apart from expanding its asset class service capabilities to include fixed income.
Knowing The Services
Clear Street’s scalable prime brokerage platform provides optimal clearing and custody solutions for market participants, without limitations on firm size, return profile, or strategy. The venture gives its clients access to clean data so the latter can make more informed decisions, faster.
“Our strength is sourcing liquidity with both high- and low-touch execution capabilities. Our focus on operational excellence makes us a leading destination for securities with corporate actions, warrants, rights, and more. We cater to funds with complex strategies and provide trusted execution services from 4 AM to 8 PM US time. Global execution is coming soon to Clear Street,” the venture remarked.
“Our proprietary securities lending and funding platforms have allowed us to build extensive distribution channels to support the liquidity needs of our clients and borrower counterparties. We provide best-in-class financing, securities lending, and client risk technology for all trading strategies,” it continued.
Clear Street’s Capital Introduction team also provides a tailored and bespoke service for each client, with unparalleled access to allocators, regardless of size. The start-up’s allocator network has the ability and appetite to invest at all stages of its clients’ life cycles. Clear Street’s corporate access team is also known for delivering exceptional customer service, focusing on strategic meeting allocations that expose leadership to unique investors.
By starting its operations with prime brokerage, Clear Street introduced innovations in the domain, by bringing out a tech-first platform, that redefines the clients’ business relationship with capital market brokers, with improved access, speed, and service for investors. Clear Street’s goal for the days ahead is simple: to introduce more innovations into the capital markets, that will positively impact investors, financial institutions, active traders, market-makers, and fintech apps.
”Our platform is built directly on the ground floor of capital markets. We’re integrated with central clearing houses and exchanges. We’ve agonised about our data model abstractions, created horizontal scalability, and crafted thoughtful APIs. All so we can create better product experiences,” said the start-up.
The Innovation Called Clear Street Studio
“Clear Street Studio,” introduced by the start-up in 2023, is an all-in-one portfolio management platform, which aligns with the venture’s vision for the future of prime brokerage. Currently in private beta mode, Clear Street Studio will allow managers to access risk and margin, exposures, P&L, and analytics reports at the touch of a button.
“We’ve spent years building our cloud-native platform for clearing, custody, risk, execution, and securities finance. Now, we’re building products on that platform,” the start-up described “Clear Street Studio” in the following words.
Talking about Clear Street Studio’s development timeline, in July 2023, the venture introduced its “Initial Risk Management System,” which gave its brokerage customers access to real-time positions, PnL (Profit and Loss), and other metrics, which will also be available via APIs.
Then in September, came the Execution Management System (EMS), a crucial component of the “Clear Street Studio,” which will now allow customers to manage their brokerage risk by being able to send orders directly through Clear Street Studio. A month later, Clear Street Studio got another game-changing component, called “Initial Portfolio Management System,” which will provide historical portfolio performance analytics and attribution.
Introducing Next-Generation Investment Bank
Here, we are talking about another innovative tool from the start-up, which is a broad suite of financial solutions paired with Clear Street’s best-in-class sales, trading, and prime brokerage platform.
“Our clients benefit from senior industry bankers supported by the partnership of Clear Street’s burgeoning technology-focused platform,” stated Clear Street about its next-generation investment bank.
Clear Street’s investment banking team has created a separate space for itself in the 21st century brokerage and capital markets ecosystem by providing clients and investors with a broad suite of financial solutions, including equity and debt capital markets, M&A advisory, and corporate access.
Talking about Clear Street’s investment banking-related activities, it has been serving as a financial advisor for ventures like Vivakor (acquirer and developer of clean energy technologies and environmental solutions) and Third Pole Therapeutics. Clear Street’s investment banking-related activities cover a wide variety of industries, including healthcare, media, energy transition, and technology and business services.
Clear Street In News
On April 2024, the start-up expanded its operations into futures clearing and execution services, after launching clearing for registered market makers in listed US equities and options.
Andy Volz, Chief Operating Officer of Clear Street, told Markets Media that when the company began building proprietary technology about five years ago, the long-term goal was to clear every product in every market globally. The venture decided to first tackle US equities, and then added US options among its operational priorities.
“We had a good amount of successful growth in clearing, executing and financing those asset classes. In the summer of 2023, we added support for US fixed income and around that time, we started a significant build-out to support futures,” remarked the official.
In July 2023, Clear Street acquired React Consulting Services and its cloud-native futures clearing platform, BASIS, which has been integrated into Clear Street’s existing cloud-native clearing, settlement, execution, and custody platform.
As of April 2024, Clear Street is clearing about 3% of equities volume daily, equivalent to roughly USD 10 billion, and Volz expects the tally to increase, with a similar trajectory for futures clearing. Clear Street has also submitted a registration for a broker-dealer in the United Kingdom with the European nation’s Financial Conduct Authority.