OpenDoor wins $10m backing for niche bond trade platform
All-to-all marketplace, OpenDoor Securities, has raised $10m from private investors, which will be used to improve the start-up's connectivity to its existing customers, according to a company statement. The platform holds auctions for off-the-run US government bonds and has had more than $60bn in orders placed since its April 2017 launch.
OpenDoor

A new trading platform focused on hard-to-trade segments of one of the most important markets has raised $10 million from private investors.

OpenDoor Securities will use the funds to improve its connectivity to current customers, according to a statement.

The platform is auction based and is what's called an all-to-all marketplace for off-the-run Treasurys and Treasury Inflation Protected Securities (TIPS). In plain English, that means the platform hosts auctions for instruments at a particular time.



The startup is trying to tackle challenging trading conditions in what is arguably the world's most important market. The US government bond market makes up around 30% of the fixed-income market, according to the Securities Industry and Financial Markets Association and American Bankers Association. In a letter to the Securities and Exchange Commission last year, they said the Treasury market is "the most important global benchmark for pricing and hedging spread asset classes and is a key transmission mechanism for US monetary policy."



However, liquidity in the Treasurys market is divided between on-the-run Treasurys, or the most recently issued bonds and therefore the most liquid, and off-the-run bonds. Off-the-run bonds represent 98% of the total outstanding issuance in the US Treasury market, according to OpenDoor, but account for less than a third of average daily trading volume.

The platform launched April 25, and the firm has seen more than $60 billion in orders placed since then. The firm has matched "multiple billions in US off-the-run Treasuries and TIPS orders with seamless settlement," OpenDoor said in a statement.