OpenBondX Aims To Change The Way Bonds Are Traded

Mar 6 2015 | 6:06am ET

When you think of fintech, Miami Beach doesn’t usually come to mind at a technology hub, but that hasn’t stopped one firm from setting up shop in South Florida. OpenBondX aims to bring transparency and automation to the traditionally opaque bond market.

Name: OpenBondX LLC
Location: Miami Beach, FL
Sector: Institutional Trading (Fixed Income ATS)
No. of employees: 7 and counting
Year formed: 2012
Stage: Pre-revenue; self-funded
Notable investors: Privately owned

Pitch:  We’re an institutional trading platform for US corporate bonds enabling liquidity seekers and providers to trade directly with one another and seek price improvement

Can you tell us a bit about your company and what it does?

OpenBondX (OBX) is a fully electronic, “all-to-all” Alternative Trading System (ATS) for U.S. corporate bonds that brings a new level of transparency and automation to the notoriously opaque and fragmented bond markets. With centralized access to new and unique liquidity providers, any institution that wants to buy or sell can interact anonymously with anyone else—for example, buy-side firms can trade with other buy-side firms, sell-side firms and with dealers.

Special order types enable participants to safely expose orders to the most aggressive pricing available, all under absolute anonymity from trading through settlement. By offering more efficient and safer trading, we expect to attract liquidity from non-traditional providers.  Ultimately, we believe our ATS will drive true two-way markets and significantly reduce trading costs.

How is OBX different than other companies in the same space?

OpenBondX is an all-to-all anonymous trading platform. This means that we do not rely on the more traditional trading method of the buy side seeking pricing from the sell side to fulfill their liquidity needs and having both parties know the identity of each other prior to any exchange of information or consummation of a trade. 

Our system has been built from scratch by professionals with many prior years of similar experience in trading systems, the regulatory environment and real-time risk management. That expertise is reflected in uniquely sophisticated trading functionality--such as specialty order types and anti-gaming features—as well as built-in real-time risk controls that make it easy for traders, prime brokers and clearing firms to comply with SEC Rule 15c3-5 and manage trading risks. We are also a lean firm that is nimble and can keep costs low.

What is your revenue model? How will the company make money?

OpenBondX offers a fully transparent, transaction-based pricing model.

Who is your target market? How big is the opportunity?

Any institutional bond trading firm, fixed income asset manager or hedge fund--including buy-side and sell-side firms. The corporate bond market is extremely large in notional terms, and although traditionally difficult to trade, we believe new and innovative ways of trading will open up more market participation.

Why are you and your team capable of succeeding?

Our team has many years of experience in electronic trading and regulatory compliance, and is exceptionally adept at automating the entire trade cycle. We have built real-time trading systems incorporating risk management in the past and are highly knowledgeable in issues such as market structure and financial information protocols.

What is your company’s next target/milestone?

Very shortly we will be live with the trading of US Corporate High Yield bonds, closely followed by Investment Grade bonds trading on a spread-to-benchmark basis.

Can you tell us one unusual fact about your company?

Despite the fact it is unusual for a FinTech company to be based in Miami Beach, we enjoy the lifestyle and climate. We do not, however, commute to work in cigarette boats wearing pastel suits with t-shirts and no socks. Nor do we commute on roller blades wearing beachwear.

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