marketlogo.jpgMarketcetera, maker of an open source platform for automated trading, has raised $4 million in a first round of venture funding.

To stay competitive, Wall Street firms need to make trades more and more quickly, says chief executive Graham Miller, so many of them are going automated. The equity market is already 30 percent automated, and should reach 50 percent by the end of the decade, he says. Although FlexTrade offers a proprietary automated service, most companies are still building their own in-house systems.

That’s Marketcetera’s opening — using the San Francisco startup’s platform is a lot easier and faster than building your own system from scratch. The fact that the company is open source gives it two big advantages over FlexTrade, too: Trading firms can easily customize it to their needs, and the basic product is free.

It’s still too early to gauge the company’s success: The platform is in public testing mode, with an official 1.0 release tentatively scheduled for the last quarter of 2008. But the approach is a smart one, and Miller says he’s excited because some big Wall Street firms are already expressing interest.

Miller also brings a good combination of experience to the job — he has a computer science degree from Stanford, and he helped Jane Street Capital build its automated trading system. When Miller describes the problems involved in creating in-house systems, he knows what he’s talking about.

Miller also spent some time at software incubator Reactivity, where he met Mozilla founder John Lilly. Lilly has been advising Marketcetera, Miller says, and helped connect the startup with its investors — Shasta Ventures and Jack Selby, managing director of Clarium Capital.

Miller plans to make money by charging for financial data that should be helpful for firms using the Marketcetera’s technology.