Why did you start BlackCat and how would you describe your business model?

Breakwell: BlackCat was founded on a shared interest in quantitative trading that goes back to the late 1990s. For the last four years, we’ve been researching and developing the tools and technologies to support our trading, both in terms of strategy development tools and the trading platform and its supporting software. The aim now is to capitalise on the technology by establishing an investment management business to which BlackCat Trading Technologies will be the technical service provider.

What’s your own financial markets background and how does this influence your role at BlackCat?

Breakwell: Despite our long-term interest in quantitative trading, neither of us has a professional financial markets background. While this has helped us to take a fresh approach to the technology used to support trading, it also meant we had to establish a lot of relationships from scratch. My experience is in managing businesses in their early growth stages, which is where we are now with BlackCat. My interest in trading emerged out of a Russian export business I was involved with and, following the 1998 Russian government bond default crisis, I gradually spent more time trading on a proprietary basis, developing a rules-based approach to trading but with discretionary execution. It soon became clear that execution needed to be automatic and the rules needed to be developed further. So it’s been a natural progression to a full-time focus on quantitative trading.

“Our initial approach was to take the trading process and break it down, asking ‘What do we need to automate efficiently?’ at every stage.”

Reeve: My background in radio communication design led to a number of investments in technology and related firms just ahead of the dotcom boom. Although I may have been rather naïve in how I made these investments – and consider myself lucky to have avoided the bust – their success got me hooked. I started to study quantitative techniques and market behaviour. Once I was making consistent returns, I decided to run quantitative models on a full-time basis and those models have grown up alongside the technology over the last four years. My background has proved extremely useful in developing trading technology because many aspects of radio system design also involve utilising technology to the edge of what’s physically possible. In addition, I was already very experienced in analysing time series and performing simulations. ...

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• Evolving in the world of ever changing requirements for automated/algo based trading, could a Buy-Use strategy be adopted or an in house development be preferred (which however involves a huge time and cost disadvantage). Also the time value of money is huge. What could possible a optimal middle path to take advantage of both routes?

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