By: John Detrixhe
Speed trader IMC BV bought a stake in a company that builds microwave radio systems for trading, providing funding that will help the data network compete in the arms race to shave microseconds off trading times.
The Dutch company’s minority stake will provide cash to McKay Brothers, a small, closely held firm that designs data networks for about 50 trading companies via its offices in Oakland, California and Paris. Financial terms weren’t disclosed in a statement on Thursday. McKay will stay independent under co-founders Stephane Tyc and Bob Meade.
IMC was founded in 1989 by two options traders and now operates in 100 markets. Its deal with McKay suggests that being on equal footing with other firms is adequate, and that it will find a competitive advantage some other way, such as through better algorithms or by seeking out talented staff.
As an investor, the Dutch company will receive financial information but no access to client-specific information. The transaction is “very arm’s length,” Tyc said in an interview. IMC doesn’t get a speed edge over other clients, nor does it get better prices.
McKay is among the companies embroiled in a dispute among locals in Richborough, England, where some in the industry are trying to build one or more 300-meter radio towers. McKay is teaming up with Vigilant Global, part of Chicago-based DRW Holdings LLC, to win residents’ support for the project.
Tyc said the company is open to investments from other trading firms. In exchange for funding from IMC’s stake, “we commit to try very hard to win the race,” he said.