Passive investing used to be simple: buy the index, pay low fees, and often beat active managers. This worked for about twenty years. Now, the market is more complicated. Investors want indices that use options strategies, autocallable structures, defined outcomes, and real-time rebalancing. Most current platforms can’t handle these needs because they were built before modern cloud computing, API-first systems, and derivatives-linked ETFs.
MerQube was created to fill this gap. The company was founded in San Francisco in 2019 by Vinit Srivastava, Keith Loggie, and Praveen Yalagandula. Their goal was to modernise the indexing industry with new technology.
“The idea for MerQube came from my work at S&P, where passive investing continues to grow and is more customised and complex, but the platforms used to run these indices were designed back in the early 2000s, ” Srivastava shares.
MerQube has raised $30 million in Series C funding, led by 7RIDGE, a private markets asset manager focused on financial technology, and Deutsche Börse Group, a major exchange and financial infrastructure provider. In July 2023, MerQube raised $22 million in a Series B round led by Intel Capital.
The technology behind
MerQube’s platform is built for the cloud and uses an API-first approach. It can handle the complex, rules-based strategies that older systems cannot. The platform supports many types of indices, including ETFs, structured products, and real-time or intraday indices that require frequent rebalancing.
The Garage platform lets wealth and asset managers build and customise index strategies without needing custom development. Right now, about $27 billion in assets follow indices calculated on MerQube’s platform.
MerQube’s biggest commercial success is in defined outcome ETFs, which use options to limit both gains and losses. The company is now the top index provider for this category in the United States. MerQube also provides indices for Calamos Investments’ autocallable ETF (CAIE), which will be the first of its kind upon its 2025 launch.
MerQube operates in a market dominated by big players like MSCI, FTSE Russell, S&P Dow Jones Indices, and Nasdaq, which control most of the global passive index licensing revenue. Solactive, a fintech based in Frankfurt, offers faster, cheaper index calculation, but its platform does not handle the complex derivatives that MerQube focuses on.
No other company combines cloud-based infrastructure with strong expertise in options-based and structured product indices the way MerQube does. The company aims to deliver custom complex solutions at scale, not just lower-cost index options.
What the money is for
The $30 million will fund three main goals: expanding into Europe and Asia-Pacific, growing the Garage platform to enable more self-service index creation for wealth and asset managers, and improving AI across MerQube’s data and index systems.
The company now has FCA authorisation in the UK and is set to accelerate its European growth, with Deutsche Börse as a strategic partner.
