Clear Street is building financial infrastructure for today’s institutions. Clients of all sizes use our clearing, custody, execution, and prime brokerage platform to operate their businesses. Pulse 2.0 interviewed Clear Street Vice President of Engineering Prerak Sanghvi to learn more about the company.
Prerak Sanghvi’s Background
At Clear Street, Sanghvi oversees the Product, Securities Finance, Risk, Electronic Execution Services, and Fact Data engineering teams. And Sanghvi said:
“Before joining Clear Street in May 2022, I was CTO of Proof Trading, where we created a low-latency sell-side algorithmic trading platform from scratch in the public cloud. Prior to that, I led the software engineering team at IEX Group, Inc. and held senior roles at RBC Capital Markets and Bank of America Securities.”
Core Products
What are Clear Street’s core products and features? Sanghvi explained:
“Clear Street is a prime broker building the financial infrastructure for today’s institutions. In 2018, we started on the bold mission to build a cloud-native prime brokerage platform from the ground up that is designed for a complex, modern global market.”
“We have built a proprietary, API-first prime brokerage platform starting with clearing, settlement, and custody. Over the past few years, we’ve scaled to other parts of the market, including securities finance, execution, and risk management. Our platform adds significant efficiency to prime brokerage and focuses on minimizing client risk and cost.”
“Today, we provide clients, from emerging managers to large institutions, with everything they need to clear, custody, execute, and finance U.S. equities, options, and fixed-income securities. In the future, our integrated platform will serve a variety of investor types across multiple asset classes on a global scale.”
Significant Milestones
What have been some of Clear Street’s most significant milestones? Sanghvi cited:
“In April 2023, Clear Street closed a $435 million Series B funding round, valuing the company at $2.0 billion. This followed our initial $165 Million Series B funding round in May 2022, which minted the company as a unicorn.”
“In June 2023, Clear Street announced plans to build an investment banking business and welcomed industry experts to lead the new practice area. In July, we announced our intentions to expand into the futures clearing market by acquiring React Consulting Services, LLC and its proprietary, cloud-native futures clearing platform BASIS.”
“These milestones highlight our success and continued mission to expand into new markets and asset classes, accelerate future product offerings, and increase availability to all market participants.”
Funding
After asking Sanghvi about the company’s funding, he revealed:
“In April 2023, Clear Street announced the completion of the second tranche of its $435 million Series B capital raise, which values the company at $2 billion. This funding round follows an initial Series B investment of $165 million in May 2022, valued Clear Street at $1.7 billion at that time.”
“The funding will support Clear Street’s plans to expand its reach across new markets and asset classes, accelerate future product offerings, increase availability to all market participants, and offer solutions for clients looking to migrate to a single-source platform.”
Differentiation From The Competition
What differentiates Clear Street from its competition? Sanghvi affirmed:
“It comes down to two things: our technology and our service. Legacy systems in the capital markets are entrenched in manual processes and siloed data, resulting in costly errors and expensive technical debt. For many firms, replacing these antiquated systems would be like removing the engine from a plane in mid-air. It’s time-consuming and challenging to execute with fragmented technology. Our platform allows for greater capital efficiency and mitigates the risk of technological debt.”
“In June, we began to expand our asset class capabilities to include certain types of fixed income, and in July, we announced intentions to expand into the futures clearing market. These developments are possible because of our integrated horizontally-scalable platform that has a single source of truth for any given piece of information. Many platforms struggle to add capabilities for new asset classes, but our technology allows us to do so in months instead of years.”
“On service, we have some of the best talent from Wall Street and Silicon Valley who have come to Clear Street and believe in our mission. We provide best-in-class service for clearing and custody, prime financing, execution, and capital introduction. We work with institutional investors of all sizes – without limitations on profile or strategy.”
Thoughts About APIs Becoming A Top Priority In Financial Services This Year
What are your thoughts on APIs becoming a top priority in financial services for 2023? Sanghvi shared:
“Well-designed APIs have great potential in the capital markets sector. They can improve workflows by reducing friction and increasing processing speed and can help facilitate massive industry shifts, such as the move to T+1 settlement in May 2024.”
“The approaching move to T+1 for U.S. equities and corporate and municipal bonds is a substantial priority for many financial firms. The shift will impact almost all industry participants. At Clear Street, our API-first platform allows all components to communicate via established contracts, enabling straight-through processing every step of the way. This shift will be much more straightforward for us. That said, shortened timelines will create challenges for legacy platforms that require manual reconciliation and extensive human intervention.”
API-First Development Impact On The Prime Brokerage Industry
How is API-first development impacting the prime brokerage industry? Sanghvi pointed out:
“Although we have seen APIs take hold in other sectors, capital markets must catch up. Capital markets infrastructure continues to rely on mainframe technology from the 1980s, resulting in outdated systems and interfaces that leave market participants struggling to keep up with changing demands from data-hungry investors and regulators. For many firms, it is challenging to replace these systems.”
“These firms frequently layer modern technology over outdated infrastructure, providing only temporary solutions and creating tech debt, broken processes, and operational inefficiencies. As a result, investors receive nightly PDF reports needing reconciliation, small frictions that feed into an overall inefficient business.”
“In contrast, Clear Street is building a unified platform using cloud-native, event-driven, and horizontally scalable technology. Our customer-facing APIs will enable new use cases by allowing users to engage with us, their prime broker, programmatically while integrating immediate feedback and valuable information into their existing workflows and systems.”
Future Company Goals
What are some of Clear Street’s future company goals? Sanghvi concluded:
“Our goals include expanding our reach across new markets and asset classes, increasing availability to all market participants, and offering value-add solutions for clients looking to migrate to a modern all-in-one platform.”
“With respect to APIs, our future goals include extending the single-source-of-truth concept to our customers’ systems through our APIs. If the customer systems tap into our APIs, they won’t need to reconcile the information. This will streamline processes and make it easier to implement transformational changes like the upcoming move to T+1 settlement.”
