Citi and HSBC have made a strategic investment in trading technology firm Adaptive, signalling growing momentum behind efforts by major financial institutions to modernise the infrastructure underpinning their electronic trading platforms.
The investment comes as banks increasingly confront the challenge of evolving front-office technology environments that have developed over decades of incremental change. In practice, many modernisation initiatives involve addressing the complexity of existing systems while evolving platforms to support increasingly automated, multi-asset trading operations.For Adaptive, the funding represents the first external investment in a company that has historically grown through client engagements and consulting-led development. According to Matt Barrett, CEO and co-founder of Adaptive, the new capital will allow the firm to accelerate product development and invest more heavily in the infrastructure surrounding its Aeron-based technology stack.
“For fourteen years Adaptive has been bootstrapped,” he tells TradingTech Insight. “Our growth has been funded through services revenue, which meant we always had to remain cash-flow positive quarter by quarter. That naturally placed limits on how much we could invest ahead of demand. This investment gives us the confidence to pursue roadmap initiatives that generate value six, twelve or eighteen months out, rather than tying product investment directly to immediate client engagements.”
The investment reflects a broader shift in how large financial institutions are approaching the design and ownership of their trading platforms. Over the past two decades, banks have built up complex technology environments through a combination of internal development and vendor platforms, often resulting in systems organised around individual asset classes, regional businesses or legacy architectural decisions. Barrett argues that this fragmentation has become a major barrier to modernisation.
“Many large banks have accumulated a patchwork of trading systems over the past twenty or twenty-five years,” he says. “They often resemble application infrastructure, but in reality they are tightly coupled to particular asset classes or regions for historical reasons. Providing a genuinely independent platform layer allows them to focus their engineering effort on the parts of the stack that actually differentiate them.”
The resulting architecture challenges have also reshaped the long-standing debate between proprietary development and vendor platforms. Rather than committing entirely to one model, many institutions are increasingly adopting a hybrid buy and build approach that combines internally developed components with shared infrastructure layers.
“Some banks have built almost everything themselves and are now looking to reduce costs because maintaining the full stack internally is no longer economical,” observes Barrett. “Others have bought most of their technology from vendors and now find it difficult to modernise because they are tightly coupled to those platforms. We sit between those two models, allowing firms to adjust the balance between building and buying depending on the needs of each business line.”
Adaptive’s technology portfolio centres around Aeron, an open-source messaging and streaming platform widely used in high-performance trading environments, along with related components such as Aeron Sequencer. The company positions these technologies as the foundation for event-driven architectures designed to support modern electronic markets.
“The investment and our recent Aeron Sequencer announcement are closely linked,” notes Barrett. “Supporting institutions as they move critical parts of their trading stack onto this technology requires a significant organisational commitment. The funding allows us to build the product, support infrastructure and ecosystem required to deliver on that vision.”
Alongside these architectural shifts, cloud adoption continues to influence how firms design and operate trading systems. Barrett emphasises that the migration of trading workloads is likely to occur gradually, with supporting infrastructure moving first.
“Moving trading infrastructure into the cloud does not mean taking ultra-low-latency venue connectivity out of colocation environments,” he says. “What it does mean is that more of the surrounding infrastructure – disaster recovery, replication, testing environments and eventually some production workflows – can move into the cloud without requiring a major rewrite of the system.”
For Adaptive, the backing from two global financial institutions represents both validation of its approach and an opportunity to expand the capabilities surrounding its platform technologies. Barrett believes the industry is moving toward more modular infrastructure models that allow firms to focus their development efforts on the parts of the trading stack that deliver competitive advantage.
“The banks investing in us share a view that this style of architecture – modular infrastructure that allows firms to focus on the parts of the stack that differentiate them – is the future of capital markets technology,” he says
As banks continue to modernise legacy trading environments while adapting to new market structures and deployment models, the ability to rebuild trading platforms on more flexible infrastructure foundations is likely to become an increasingly important theme across the industry.
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