Citing an “intolerable and unsustainable” situation as well as the need for “price transparency and deeper liquidity”, a new firm, AbbeyCross, has raised $2.47 million in pre-seed funding, to “improve the underlying market infrastructure for emerging market currencies”.
The firm, which also cites itself as “the world’s first trading and compliance marketplace for EM currencies” has raised the funding in non-priced convertible notes as it seeks to remove inefficiencies in the market and bring “deeper currency liquidity, price transparency, and market data to a fragmented EM currency payment industry”.
The firm asserts that the illiquid nature of EM currency pairs, the reduced correspondent banking relationships, and complex regulation necessitates the use of intermediaries – increasing the costs and friction to exchange. This cost amounts to approximately $10 billion each year for banks and payment providers, the firm claims, adding, “Worse still, many currencies are traded without full-price discovery, creating an unlimited compliance and regulatory risk.”
The firm argues that no one bank or payment provider can resolve this problem alone, which is why AbbeyCross is necessary and is collaborating with participants across the market to address the challenge.
“We are grateful to our investors and look forward to developing the AbbeyCross solution and changing the EM currency market for the better,” says Mike Robertson, CEO and co-founder of AbbeyCross. “The current situation is intolerable and unsustainable for those who rely upon the exchange of EM currencies, the banks and payment providers and the regulators themselves. Price transparency and deeper liquidity is desperately needed and that is what AbbeyCross intends to deliver.”
Keith Hamlin, founding partner at Third Prime, which led the funding round, adds, “While currencies can efficiently be swapped between developed markets, in emerging markets the cross-border payment ecosystems are opaque and lack competitive pricing. The AbbeyCross team brings a wealth of knowledge and experience to this underserved segment of the payments market. Their cross-border EM payment platform will revolutionise the space by driving down costs and enabling demonstrable regulatory compliance.”
Meanwhile, Doug Atkin, managing partner of Communitas Capital, which was also involved, says, “The AbbeyCross marketplace is going to change an industry, and we’re excited to work with a team that have the experience, expertise, and network to solve a challenge that is set to grow.”