OpenDoor Securities (“OpenDoor”) is today launching the first trading platform dedicated to improving liquidity in the less liquid segments of the U.S. Treasury bond market.
Nearly three dozen firms representing more than $5 trillion of AUM and six sponsor-dealers are already onboarded to participate.
The diversified client base includes central banks, hedge funds, pension funds, sovereign wealth funds, mutual funds, insurance companies, primary dealers, asset managers and trading firms.
The platform provides an all-to-all marketplace for market participants struggling to source liquidity in off-the-run Treasuries (OFTRs) and Treasury Inflation Protected Securities (TIPS), the largest pain points in Treasuries for many investors. These securities represent 98% of the $13.8 trillion of total outstanding issuance in the U.S. Treasury market, yet account for less than 32% of average daily trading volume.
OpenDoor’s market-based solution is the only all-to-all, session-based trading platform for OFTRs and TIPS. In addition to the current participants and the six sponsor-dealers, firms representing another $16 trillion of AUM, as well as five additional sponsor-dealers, are preparing to join the platform by the end of Q2 2017.
“This is a watershed moment for the U.S. Treasury market,” said Susan Estes, CEO of OpenDoor, and former global head of Treasury trading at Morgan Stanley and Deutsche Bank. “The Treasury market remains bifurcated between the six benchmark issues and the remaining three-hundred plus off-the-runs. As a result, real-money accounts continue to experience increased transaction costs in their core bond holdings through ever widening bid-offer spreads. This is felt to a much larger degree by accounts trading less volume than the top ten. OpenDoor’s solution works for all participants, targeting an often-overlooked but vital pillar of national debt.”
“Liquidity conditions remain challenging across many asset classes, even in the off-the-run segments of liquid markets such as U.S. Treasuries,” said Barry Cohen, Managing Director & Head of Rates Sales Americas at Société Générale. “As an active primary dealer and market maker in U.S. Treasuries, Société Générale actively seeks out opportunities to improve the liquidity we can provide to our customers. We absolutely believe that the OpenDoor platform represents an innovative way to utilize technology to achieve added liquidity in the off-the-run and less liquid corners of the Treasuries market. Being involved on Day 1 shows our commitment to the U.S. markets, our customers, and our partnership with the team at OpenDoor.”
“We’re excited to work with OpenDoor as a Sponsor,” said Charlie Comiskey, Head of U.S. Rates Trading at Bank of Nova Scotia, a primary dealer. “OpenDoor’s platform increases the pool of liquidity for the entire market. Scotia acts as a riskless principal, allowing our customers to leverage our clearing infrastructure in an anonymous marketplace. We in turn, also transact anonymously for our principal business. It is a win-win.”
The OpenDoor platform provides traders and institutions anonymous, session-based trading through a dealer-sponsored model with zero information leakage™. Sponsored dealers are investment banks that act as clearing counterparties on all trades for buy-side participants, as buy-side firms are not allowed by the SEC to trade directly with each other. The first auction will take place at 11am EST on Tuesday, April 25, 2017.