Automated trading specialist Alistair Brown – co-founder of Lime Brokerage – is turning his attention to fixed income with the launch of OpenBondX, an electronic “all-to-all” trading platform for US corporate bonds.
The ATS aims to attract new liquidity from non-traditional providers frustrated by the current antiquated market structure.
Just as Lime revolutionised quantitative and automated trading, Brown’s recipe for OBX incorporates uniquely sophisticated trading and risk management functionality into a transformative business model that sets it apart in a sea of bond-trading platforms.
For example, existing systems have been created by fixed income institutions and traders with domain knowledge but little-to-no experience in electronic markets and infrastructure. OBX was built from scratch by professionals with significant experience spanning e-trading platforms, algorithmic strategies, market structure, financial information protocols, regulatory compliance and real-time risk management. Their expertise is reflected in a platform that brings unusual innovations to fixed-income trading, including hybrid protocols, specialty order types, anti-gaming features, built-in real-time risk controls, the infrastructure to facilitate larger transactions and the ability to automate the entire trade cycle.
By enabling more efficient and automated trading, OpenBondX also is catering to a new generation of fixed-income participants: quantitative traders and buy-side participants seeking additional means of alpha generation who demand more sophisticated technology.
Other innovations that OpenBondX brings to the market include:
• Firm and final pricing, which has been non-existent in a market where dealers typically offer indicative prices and where the harmful practice of “backing away” happens all too often. Traders also benefit from a greater certainty of execution.
• All-to-all anonymous trading: OBX does 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. Any institution that wants to buy or sell can interact anonymously with anyone else• from trading through settlement.
• Opportunity for appreciable price improvement through innovative protocols, matching algorithms, order types and market-based efficiencies.
• Mitigated counterparty risk through binding Principal Letters issued by OBX’s clearing firm, backed by over USD1.8 billion in regulatory capital.
