Electronifie is challenging problems of liquidity and information leakage in the US corporate bond market with an electronic trading platform that connects buyers and sellers directly but anonymously, limits market impact and generates liquidity.
The company was set up by former Goldman Sachs trader and SEC executive Amar Kuchinad in downtown New York in March 2014 and went live with the electronic trading platform in May 2015. The company aims to achieve its mission of generating liquidity for corporate bond investors in a fair and open marketplace by providing an all-to-all platform designed for block-size trades and including some smart execution features.
Nicole Olson, chief strategy officer at Electronifie, explains: “Our platform adds liquidity to the market by separating what is typically conjoined – price and liquidity discovery. Electronifie solves the problem of dealers facing regulatory challenges around committing capital to clients by enabling buy-side participants to trade directly with one another using hidden orders. These orders are based on pricing information that is typically provided by designated market makers in our displayed order book. The platform matches market orders intelligently while protecting sensitive information, which reduces information leakage and market impact, and it uses an all-to-all model, which means all subscribers are treated equally.”
The platform is based on the Chromium open source web browser and allows users to set alerts, perhaps when another user enters an order that is of interest to them. The order entry is shared on the platform, but not the side or size of the order. Olson says: “The platform order flow is live and executable, meaning a buyer can execute immediately. There is also a platform-wide 10 minute matching session that is launched when two orders in a single bond are matched. Others interested in transacting in that bond are then invited to enter orders to be matched in time priority at the price of the initial match. By preserving anonymity and protecting sensitive order data, additional safe liquidity is generated.”
Electronifie has won the attention of 22 of the top 50 anonymous asset managers that are now participants on the trading platform and says a further 80 are in the pipeline with one going live every day. With some significantly sized orders being executed on the platform, the company suggests its model is working well and says its next aim is to build critical mass by adding more participants and, therefore, more orders to the platform.