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Ex-FTX executive raises $12M to build Robinhood for sophisticated traders

Feb 14, 2024
A suit jacket with the Robinhood logo in the lapel pocket.

Illustration: Gabriella Turrisi/Axios

Architect Financial Technologies, founded by former FTX.US president Brett Harrison, has $12 million in seed funding, he tells Axios exclusively.

Why it matters: Architect plans to launch a multi-asset brokerage for sophisticated traders, starting with derivatives — an in-demand, though heavily fragmented market.

Details: Blocktower Venture Capital and Tioga Capital led the round, with participation from CMT Digital, ParaFi Capital, A Capital, and Twelve Below.

  • Before this seed round, Architect raised $5 million in funding from investors including Circle Ventures, Coinbase Ventures, SV Angel, and SALT Fund.

How it works: Founded in 2023, Architect acts as a hub for institutional investors to monitor and execute derivatives trades in one spot. That includes options, digital assets, futures, and agricultural hedges from venues including Coinbase, the CME, and CBOE.

What's next: In the next two months, Architect plans to launch its brokerage, initially focused on CFTC-regulated assets like bitcoin, S&P 500 futures and commodities.

  • Doing so would allow Architect to earn commission and cross-sell products to its roster of customers.
  • Derivatives generally reap higher revenues than trading of the underlying assets.
  • Already armed with a CFTC broker license, the firm is working to register as a broker-dealer with FINRA, which will allow it to directly offer equity, stock options, and treasuries trading.

What they're saying: "The crypto exchange platforms were all built in the last five to 10 years. They're ultra-modern... and that is what the current class of investors have come to expect," Harrison says.

  • "If you compare that to the traditional derivatives world, which has technology that was built sometimes 30 to 40 years ago, whether that's on the front or back office clearing side, it's an entirely different story."
  • Harrison, who was formerly head of semi-systematic technology at Citadel Securities, says the trading platform will allow traders to plug in their own algorithms for automated trading.

Context: Derivatives trading has long overtaken stock trading at Robinhood, where options-based transaction revenues were $121 million in the fourth quarter of the 2023, compared to $25 million in equities.

  • Interactive Brokers posted a 21% uptick in options volume and 4% uptick in derivatives during the fourth quarter, while stock volume fell 22%.
  • U.S.-based crypto exchanges have also entered the derivatives space, where volumes consistently beating out the spot market (69.9% of crypto trades were in derivatives in December, according to CCData). Coinbase announced its European derivatives launch this year.

Between the lines: In response to increased regulatory scrutiny, Harrison says Architect plans to go above regulatory requirements, vetting its customers based on years of experience, and testing their knowledge on margins, order types, as well as derivatives settlements.

  • Architect's current customers include hedge funds, trading firms, and family offices. The new platform is also aimed at including sophisticated retail investors into the mix.

The big picture: Equity trading was the first asset class to get a tech makeover. Now, fintech founders are turning their attention to a whole new set of assets, from bonds to derivatives.

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