By Zoe Schiff
Microwave connectivity specialist McKay Brothers has secured funding for future growth through a capital injection from Dutch trading technology provider IMC. The investment agreement – announced September 1 – also reaffirms McKay’s continued independence under co-founders Stéphane Tyc and Bob Meade.
Terms of the investment weren’t disclosed, but the companies said funds would be used for the further improvement of McKay Brothers’ high-speed networks, designed to serve the latency sensitive trading community. Specifically, McKay will commit further investment to reduce latency to the physical limit in its key long haul routes, include to data centres in Newark and Secaucus, NJ, home to several key US execution venues.
Also of interest, is McKay’s microwave connection between London’s key trading venues and Frankfurt, home to Deutsche Boerse and its Eurex derivatives marketplace. The connection will be key to firms’ hosting considerations as MiFID II takes effect in early 2018, and as the proposed merger of the London Stock Exchange and Deutsche Boerse is consummated, assuming it goes ahead as planned.
In return for its capital investment, IMC will acquire an equity stake in McKay but will take a “very arm’s-length” approach, according to Tyc. IMC will be granted access to financial information resulting from its investment, but will not have access to client information. IMC also will not receive latency and pricing privileges over McKay clients.
McKay Brothers is expecting to see an increase in financial position, an increase in network speed and data coverage, and the relative insurance of its own autonomy, while IMC wants to give fair access to a fast network to liquidity providers.
“Our ability to attract financial backing from a firm with the industry standing and vision of IMC underscores our value to market participants. The agreement will facilitate further innovation and improvements to our networks,” remarked Meade.
“This agreement not only further strengthens our financial position, which will keep us ahead in terms of network speed and reach, and data coverage and quality, but, as importantly, maintains our autonomy,” added Tyc.