Proof Trading Progress Update: Q2 2023

From a sales perspective, Q2 was by far the most exciting quarter in the history of Proof! We saw a surge in new client interest, and our pipeline of asset managers currently going through our onboarding process ballooned from ~5 firms to more than 20. In some ways it was a “hurry up and wait” situation, as many of these clients’ due diligence/onboarding processes will likely take several months, but we are still thrilled with all the new momentum. It feels like we have finally hit an inflection point in our growth trajectory, and we can’t wait to have our algos in the hands of this broader group of asset managers.

Major updates from Q2 2023

• Massive uptick in client interest in our offering with ~15 new buyside clients expressing an intent to connect and beginning our onboarding process. The majority of this group will be connecting to our platform directly, whereas as a few will be accessing us via directed routes provided by other sell-side firms.
• We published new research on information leakage and on scoring price movements.
• Completed software development of our third algo: a more aggressive liquidity seeker. It is currently being tested in production and will soon be rolled out to clients.
• We went live with Barclays as our second DMA partner, and we incorporated several new venues into our liquidity seeker, including Intelligent Cross, OneChronos, BIDS, and Barclays LX.
• Robledo Alencar joined our team as a Senior Software Engineer, and Bill Guinan joined us as a strategic advisor specializing in sales/growth. We are delighted to have them both on the team!

Goals from our previous update

Technology

Finalize our production integration in with Barclays as an additional DMA provider.

• (10/10) We went live in production with Barclays this quarter.

Review and enhance our failover procedures around cloud, network and market data failures.

• (7/10) We were able to map and standardize most of our failover procedures. Our goal is to fully finish this task in the next quarter.

Product/Research

Design, build, test, and release our third algo: an aggressive liquidity seeker.

• (8/10) Algo development is complete. We are currently performing a final round of live tests in production, and we will soon begin rolling the new algo out to clients.

Publish our quant researcher training materials as a freely available course.

• (4/10) Again made some progress on this, but ended up prioritizing other quant research goals.

Submit theoretical research on information leakage to a scientific publication venue.

• (10/10) Our work is under submission to a conference and is publicly available as a whitepaper

Sales/Marketing

Go live with at least 3 new clients.

• (5/10) We’ve signed Electronic Trading Agreements with 3 new clients in Q2. We haven’t officially flipped the switch, so we don’t consider them live, just yet. But we hope to get these 3 across the finish line imminently.

Begin the onboarding process with at least 2 new clients.

• (10/10) We’ve had a significant uptick in both client outreach and positive feedback in Q2. ~Fifteen new clients have indicated their intent to onboard.

Continue implementing a more systematic business development strategy.

• (6/10) Client outreach and shepherding the onboarding process has taken priority this quarter, while we continue to benefit from our systematic outreach process, further developments on this front have taken a pause.

Operations/Regulatory

Obtain NY State WBE Certification for our broker-dealer subsidiary, Proof Services LLC.

• (0/10) NYS Certification will take longer than we expected and likely push out to Q4. While this certification will be nice to have once it finally comes through, we have found that for most clients it is not a gating factor for classifying us as a WBE broker.

Successfully complete all year end audits and exams.

• (10/10) All 2022 regulatory tasks and audits have been successfully completed and closed out.

Hire 2–3 additional team members, with a specific focus on sales and engineering.

• (9/10) We made two additions to the team this quarter: Robledo Alencar joined our technology team, and Bill Guinan came on as an advisor!

Goals for the next 3 months

Technology

• Review and enhance our failover procedures around cloud, network, and market data failures.
• Migrate Exegy XCAPI to the latest version.
• Complete any outstanding EMS/OMS integrations for next wave of new clients.

Product/Research

• Complete testing of the new aggressive liquidity seeking algo and fully release it in production.
• Add feature to allow clients to enter relative limits on orders based on a reference ETF or Index.
• Publish our quant researcher training materials as a freely available course.
• Build on our information leakage research and incorporate it into products.
• Perform initial research on trading behaviors around closing auctions.

Sales/Marketing

• Go live with at least 3 new clients and begin the onboarding process with at least 2 new clients.
• Continue implementing a more systematic business development strategy.

Operations/Regulatory

• Obtain NY State WBE Certification for our broker-dealer subsidiary, Proof Services LLC (most likely in Q4), and explore WBE certification from other widely recognized organizations as well.