Alphacet Readies an STP Solution for Quants

March 31, 2008
Alexa Jaworski

Stamford, Conn.-based start-up Alphacet is aiming to launch in the second quarter its flagship product, a stand-alone solution for high-speed quantitative strategy development and deployment.

Alphacet, which just completed an initial round of financing by private investors including Boston-based Saturn Venture Capital, touts the product, dubbed Alphacet Discovery, as a "complete straight-through processing [STP] solution for quantitative and statistical strategy development and deployment" that gives quantitative analysts and funds "the ability to build, test, walk forward, refine and implement strategies at dramatically faster speeds, with zero coding."

"We're the only ones who actually provide a one-stop shop on behalf of our customers," said Peter Sibirzeff, CEO of Alphacet, which was founded last year. The Discovery platform is the product of four years of development and testing--the technology is based on work by researchers at the University of California. Sibirzeff, who until last year was managing director of sales for Orc Software in North America, declined to name the firms currently participating in Discovery's trial run, but he said that three of the five are funds with $10 billion in assets under management.

"Customers today are using a variety of external vendor solutions as well as in-house built solutions like Excel sheets to perform these functions," he continued. "It's not that we're replacing a single vendor--we are going to change the behavior and the structure of how quants traditionally have been modeling financial strategies."

Alphacet Discovery allows users to integrate real-time, static and historical data from market data vendors, exchanges and proprietary sources; offers high-speed, object-oriented visualization tools; and provides preconfigured quantitative, technical and statistical components for building all major strategy types, according to the company. In addition, Alphacet says that Discovery whittles down strategy-generation and production time to one to four weeks, from an average of 13 to 26 weeks using conventional methods.

Sang Lee, co-founder and managing partner of Boston-based research firm Aite Group, which recently issued a report on alpha generation and quants--"The World According to Quants: From Alpha Discovery to Execution"--said the market is currently lacking a "comprehensive STP offering which can be used by not only pure quants that may deploy black-box trading, but also traditional asset managers that may use sophisticated quantitative analysis to determine their key investment decisions regardless of how frequently they trade."

"Alphacet is trying to become a technology platform to meet those market demands," said Lee. "This space is different from the execution space, which has been the focal point of a lot of the research to date--i.e., algorithmic trading. Instead, players like Alphacet focus on providing in-depth, STP functionality around facilitating alpha generation strategies ... which generate buy and sell signals."

Alphacet chairman William Guttman, who is a special partner at Saturn Venture Capital, said that Discovery "will change fundamentally the way many quants work, and improve their investment performance in the process. In terms of power, flexibility, speed and ease of use, Alphacet Discovery represents an enormous leap beyond anything else in the market today."

Alphacet plans to add several partners to the Discovery architecture over the next six months, which "will bring additional value to our customers," Sibirzeff said. He declined to name the partner vendors.