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OneChronos, a trading startup using AI to match trades, raised $32 million in funding from Addition, the company tells Axios exclusively.

Why it matters: Over 17% of U.S. equity volume was executed on private "dark pool" markets in October, an eight-year high, per Rosenblatt.

Zoom in: The round brings the company's total raise to $82 million. It was valued last year at $250 million, according to Bloomberg, with CEO Kelly Littlepage calling the deal an up round.

Context: Launched in 2022, OneChronos is an alternative to traditional exchange used by institutional traders to limit the impact of large trades on stock prices — aka a dark pool.

Its customers are institutional broker-dealers, and the company says it can further damper adverse stock-price changes from a trade with the help of AI. "We help them trade more with less market impact," says Littlepage.

Today, most traditional securities markets fill orders based on price and time — prioritizing orders with the best price, and ones that arrive first — a process that has changed very little since the late 1700s.

Littlepage says OneChronos uses an auction model, holding multiple auctions a day, thereby pooling liquidity so more buyers and sellers can be matched at one time. That, the company says, leads to better price discovery.

How it works: The "problem looks shockingly similar to the same type of game-playing optimization problems that come up in AlphaGo and protein folding," says Littlepage.

AlphaGo was hailed as a breakthrough in AI research when it beat the leading Go player in 2016, as it wasn't using brute-force computational power to search through all possible moves.

OneChronos similarly uses AI — not to find all possible trades within a customer's parameters, but to look ahead and predict what trades or combination of trades are most likely to be beneficial to both buyer and seller.

Behind the scenes: The company says its AI enables it to execute more complex trades for traders.

For example, if a trader sought to buy shares of Samsung in Korea and sell a stake in Apple in the U.S., it would currently require three separate moves: the selling of Apple stock, conversion from the U.S. dollar to the Korean won and, finally, the buying of Samsung shares.

OneChronos would enable investors to execute that as one package.

What's next: OneChronos seeks to launch in the U.K. and Europe, having recently filed with U.K. regulators.

The big picture: Rosenblatt data shows these newer dark pools have been gaining ground.

OneChronos grew to 0.27% of all U.S. equity trading in September, from 0% in late 2022.

Another new-age player, PureStream, had 0.08% of market share in late 2022. That figure hit 0.30% in September.

IntelligentCross, which had 0.95% of the market in late 2022, had 1.58% by September 2024.

This growth comes as traders are increasingly looking to contain any adverse effects, says Rosenblatt Securities partner Justin Schack.

"All are using different approaches to shield people from trading with informed parties and shield them from suffering adverse price impact," he says.

"Speed is really important in equity trading. Some of these newer ATSs de-emphasize speed so you don't have to be the fastest to get the best execution," he adds.

What we're watching: How potential market volatility could affect these newer players, as traders tend to flock to traditional exchanges in extremely rocky times.

Exclusive: Addition commits $32M to dark pool trading startup OneChronos

Tiger Cub-affiliated Addition led the round, as October data showed new highs.

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OneChronos, a trading startup using AI to match trades, raised $32 million in funding from Addition, the company tells Axios exclusively.Why it matters: Over 17% of U.S. equity volume was executed on private &quot;dark pool&quot; markets in October, an eight-year high, per <a class="gtmContentClick" data-vars-link-text="Rosenblatt" data-vars-click-url="https://www.rblt.com/market-structure-reports/let-there-be-light-us-edition-61" data-vars-content-id="7c72951a-c41e-4d85-8709-0f85413a8f5c" data-vars-headline="Exclusive: Addition commits $32M to dark pool trading startup OneChronos" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.rblt.com/market-structure-reports/let-there-be-light-us-edition-61" target="_blank">Rosenblatt</a>.

Exclusive: Addition commits $32M to dark pool trading startup OneChronos

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