Growing with capital markets

What

Clear Street is a NYC-based cloud-native platform that helps clients with clearing, custody, execution, and prime brokerage for operating their businesses. Founded in 2018, Clear Street recently secured the second phase of its $435M Series B, valuing the platform at $2B. Clear Street has seen investment from Prysm Capital, NEAR Foundation, NextGen Venture Partners, and others.

On July 13, Clear Street announced the acquisition of React Consulting Services, LLC, and its futures clearing platform, BASIS. Once integrated, BASIS would let clients clear, custody, and finance futures, complementing the equity, options, and fixed-income capabilities Clear Street already offers.

Why

According to Andy Volz, COO of Clear Street, current market conditions make decisive moves like the acquisition—as well as other expansionary initiatives—particularly strategic. There has been slower capital markets activity since the second half of 2022 compared to the previous four years.

This means that top talent is leaving their previous firms, which lets Clear Street hire experts and leverage their insights to move into new verticals and geographies. “So we see the opportunity to grow an investment banking and capital markets franchise that relies on our core technology,” Volz said. The acquisition of BASIS only bolsters those aims through an expansion into futures.

Since it’s self-clearing, Clear Street has a particular advantage. Volz said the company sees investment banking and capital markets business also feeding into its other business lines—trading, prime brokerage, and others. “Within the boutique space, that doesn't really exist anywhere else,” he said. This edge also brings a lower cost structure to Clear Street’s operations.

How

Clear Street is in the midst of a hiring push to help actualize these ambitions. It’s hired four partners into the investment banking group that will found its core founding team; the partners are building a team around them, including analyst, associate, and research talent. Clear Street is growing a healthcare, investment banking, tech, and clean tech franchise to begin with, and may eye other sectors moving forward.

Leadership chose those four verticals because of their relatively non-cyclical nature. “It’s a good place to start and build a foundational franchise,” Volz said.

The company is also in the process of registering a futures commission merchant, and is working on a registration in the UK to begin a foray into London. Clear Street is also going to start heavily clearing for market makers.

Finally, Volz sees an rebound in capital market activity from the lows, with investment banks discussing building up their deal calendars and increasing their pipeline around transactions. “We think we're timing it well with an experienced team that can get up and running very quickly into a market that's improving in that particular business line,” he said.