Cognotec, the once Irish tech high-flier has been sold to Newry headquartered First Derivatives plc for $4.7million.
The foreign exchange innovator that produced the first automated foreign exchange dealing system, as well as the first hosted e-commerce enabled trading platform, collapsed last month and was among the high hopes of the Irish-owned technology sector in the 1990's.
Founded in 1996, First Derivatives currently employs 400 people worldwide and boasts many of the world’s top financial institutions as clients. The company has developed its own range of software – Delta - which it says is in use in many of the top tier investment banks and hedge funds. The Delta suite of products includes algorithmic/program trading solutions, market data solutions, risk management applications and market data management software. First Derivatives also provides consulting services to clients, across the globe with operational centres in Europe (London and Stockholm), Amercias (New York, Chicago and Toronto) and Asia (Sydney, Singapore, Hong Kong and Shanghai).
At the height of the boom, the foreign exchange market was growing rapidly and in 2007 daily trading volume of more than $2,000 billion was being logged and the market was forecast to reach $3,000 billion in 2010.
In July 2006, Finfacts spoke to Cognotec founder and Chief Executive Briain Maccaba on the FX industry and plans for the company.
Briain Maccaba, who worked as an economist at the Confederation of Irish Industry - - a precursor to business group IBEC-- in the 1980's, founded Cognotec in 1991.
The firm had about 140 of its 200 strong payroll based in Dublin in mid-2006, according to Maccaba.
The company had revenues of $28.1 million in 2005 and made a profit of $3.7 million. It expected revenues of over $40 million in 2006. It had operations in Dublin, London, New York, Tokyo and Singapore.
Cognotec said that online dealing had meant trading volumes had migrated to the bigger global players much more quickly than anticipated. Greenwich Associates found that Citigroup, UBS and Deutsche Bank together earned 30% of the total revenues from the top 30 banks globally. In addition, Cognotec experienced online trading volumes increase by 128% over the previous year. As a result, formulating a customer-lead technical strategy for the dealing operation emerged as a priority for many banks.
In May 2006, Cognotec announced the launch of its new, next generation solutions platform, Cognotec RealStream. Based on new, "leading-edge technology," the first phase of Cognotec RealStream was Cognotec RealStream-Margin, an integrated web-based solution designed for banks looking to target the increasing growth in flows originating from investors actively trading FX as an asset class.
Cognotec said that it was targeting the top 100 banks in the world, which it had divided into three categories. Contracts with so-called ‘tier one’ banks, which were worth more than $20 million over three years, tier two deals were worth about $10 million and tier three were worth up to $5 million.
Briain Maccaba told Finfacts that the company would have revenues of $100 million before contemplating an IPO.
Last Monday, former Intel head Craig Barrett said in Dublin, that Ireland should focus on developing indigenous technology companies and Finfacts asked if Cognotec, the latest promising hope of the 1990s to either collapse or be acquired by a rival, would at official level prompt a search for any lessons?
Finfacts article, Feb 2010: Building an indigenous Irish exporting base; Being prepared for a hard slog and the sheltered workshop that is RTÉ
First Derivatives CEO, Brian Conlon commented today: “We are delighted with this news, as Cognotec’s business, its people and its product portfolio have always been highly regarded in the FX world. That is why it has secured a global client base of leading banks and brokers. First Derivatives share many of these global clients and we have a strong track record of success in delivering technology solutions to the capital markets industry.
“First Derivatives will extend Cognotec’s product and service capabilities significantly, through increased investment in R&D, together with the cross pollination of intellectual property and expertise in capital markets. First Derivatives has a strong track record of acquiring niche capital markets technology companies and significantly expanding their operations through investment and leverage of synergies with its business.”
Conlon continued: “We will be making a significant investment to support and enhance the AutoDeal+ and RealStream products, which will expand our range of applications and extend our offering in the FX market. This will be a coming together of two organisations with a shared vision to produce innovative, market leading software.”
