Cognotec to expand with extra funding

Against a backdrop of declining investment in e-trading initiatives, Dublin-based forex technology firm Cognotec said it has secured $14.5 million in additional funding.

Cognotec will use the money to fund its continued expansion, particularly in emerging markets, which its chairman Brian Maccaba identified as the fastest-growing sector of the global forex market.

"No-one’s trading much euro/dollar any more," Maccaba told RiskNews' sister publication FX Week. "The area where the market has need for liquidity is emerging markets." That’s partly because of macro trends, such as China joining the World Trade Organisation last year, which has boosted the development of financial services in the Asia-Pacific region, he said. Singapore, Hong Kong, China, Taiwan, South Korea, Thailand, India and Malaysia are the main areas targeted for expansion, he added.

A key attraction for banks in these areas will be Cognotec’s Liquidity Linq e-trading service, said Maccaba. The system links banks’ auto-trading platforms so they can outsource price-making to each other on behalf of their clients.

"The local banks can provide local expertise to global banks. And the flipside is that global banks provide best-of-breed pricing and technology to local players," Maccaba added.

Two-thirds of the latest investment is from FinVentures, the private equity arm of emerging markets specialist Standard Chartered Bank. Cognotec’s aim to expand into emerging markets is a continuation of its approach with other investors, said Maccaba.

"When Pincus [US venture capital firm Warburg Pincus] invested in 1998, we had no US clients. We now work with 10 of the top 20. And when [Japanese internet firm] Softbank invested in late 1999, we had no Japanese clients. We now work with the top two Japanese banking groups," he explained.