Platform Profile: Electronifie
Amar Kuchinad is CEO of Electronifie.
1. Assess the state of your corporate bond trading platform – what were the primary milestones/accomplishments over the past year?
Over the past 12 months, we have collaborated closely with our buy-side and sell-side clients to launch the first continuously-traded, all-to-all electronic corporate bond trading platform with 100% executable pricing. We have invested much of our time and resources into iteratively developing a world-class technological product that fits into the workflow of all of our Subscribers, who represent the spectrum of blue-chip real-money asset managers, hedge funds, and broker-dealers that make up the corporate bond market. Electronifie’s unique mix of execution mechanisms, smart notification technology, and Subscribers has resulted in a network with billions of dollars of latent liquidity and over $1.5 billion of executed orders. The current average institutional trade size on Electronifie is roughly $3 million, proving against conventional wisdom that round-lot and block trades can be executed on our purely electronic platform.
2. What end-user/buy-side challenges are you addressing, and how?
Buy-side traders have told us that they are finding it increasingly difficult to obtain immediate liquidity from their traditional dealers and, as a consequence, are bearing the brunt of the costs of information leakage themselves. Sell-side traders are facing headwinds from reduced price discovery and risk appetite as dealers cut balance sheet allocations, trim client rosters, and reduce headcount to save capital and expenses. Electronifie provides a marketplace where all traders can anonymously interact will all other participants to solicit for contra interest, agree on a clearing price, and execute transactions without fear of information leaking about their unfilled trading intents.
3. What are your key current initiatives?
Having designed and developed our technology over the past 12 months, we are focused on expanding the breadth and depth of activity in our marketplace. We are increasing the participation of the nearly 400 traders who are already enabled to trade on Electronifie and are enabling hundreds of additional traders over the next several months. The “network effect” of each additional active trader has helped accelerate order match rates by more than 3x over the past 6 months.
4. How would you assess the future of the corporate bond trading platform business (broadly), and your business specifically?
While we believe that voice trading will have a very important role in the broader marketplace for the foreseeable future, electronic trading has become an increasingly important liquidity supplement for market participants over the past year. We see this trend continuing in 2016 and beyond. We also believe that as regulations and costs continue to crimp the ability for the traditional dealers to provide liquidity, there will be room for multiple electronic platforms in the marketplace. Just as an investor currently chooses among many dealers for each potential trade based on each dealer’s knowledge and network of other clients, traders can choose from a variety of electronic platforms based on their preferred execution mechanism, target customer base, and desired transaction costs. We think Electronifie fits very well into the current and future ecosystem, as we are open to both sell-side and buy-side participants and have designed our System to operate in parallel with traders’ existing workflows.