Competition in the fintech sector is increasingly fierce as firms race to establish themselves in a market dominated by traditional players. These innovative companies – which are changing the competitive landscape and redrawing the lines of the financial services industry – are fighting for a foothold in the fintech space.
OpenDoor Trading’s off-the-run (OFTR) and Treasury inflation-protected securities (Tips) trading platform is unique; not only is it the first session‑based, all‑to‑all, anonymous, market‑based solution for OFTR and Tips, but it is also the first female-owned and operated bond-trading platform in the world. These qualities have earned it Central Banking’s FinTech & RegTech Global FinTech Provider Of The Year Award.
The platform was launched in April last year in a bid to provide better transparency and liquidity with reduced transaction costs for buy- and sell‑side firms wanting to trade in the US Treasury market. The US Treasury market has suffered from a lack of liquidity in OFTR Treasuries – those issued before the most recent offering – since the global financial crisis, due in part to regulation that requires banks to meet higher capital requirements, and a reduction in market-making activities. It has made it more expensive and difficult for investors to buy and sell these treasuries, which account for 98% of the entire $14.3 trillion US Treasury market, but only 32% of the daily volume.
OpenDoor was the first firm to confront this issue directly and provide a solution. Institutions trading on its platform now have total assets of $7.3 trillion. The firm has run more than $629 billion in order volume, matched trade volume exceeding $17 billion and seen its daily order volume triple since the end of last year. The platform’s client base includes asset managers, hedge funds, pension funds, sovereign wealth funds, mutual funds, primary dealers, insurance companies and trading firms.
The fintech firm has also added a number of innovative functions to its platform, including SuperGrid and ClearView. SuperGrid is an interface that gives users control over issues, orders and trades they wish to see, selecting from the full set of OFTRs and Tips for each matching session. ClearView is a real‑time indicative pricing curve and uses OpenDoor’s internal pricing models to give clients pre-trade insight into price drivers across markets. The systems were launched to coincide with OpenDoor’s third $10 million funding round.
In April 2018, OpenDoor began offering mid-market levels for yield spreads – the only firm to offer this service for OFTRs and Tips. This enables market participants to obtain reference pricing for a US Treasury they are looking to trade, even if they do not trade on OpenDoor’s platform.
OpenDoor’s success has not gone unnoticed and, since launching, has raised $32 million.