OpenDoor Securities has launched the first all-to-all continuous order book for off-the-run Treasuries (OFTRs) and Treasury Inflation-Protected Securities (TIPS), addressing a systemic liquidity issue for the government bond market. The trading platform – which previously only offered session-based execution – will now benefit from State Street Global Markets executing transactions matched on the platform as a riskless principal intermediary to Participants and Clearing Dealers.
Over the past three years, OpenDoor has set out to transform the liquidity profile of OFTRs and TIPS. It first came to market with session-based auctions, concentrating liquidity at specific points during the trading day. With momentum gathering from a range of market participants and the support of major industry infrastructure providers, OpenDoor has now expanded to a continuously offered, all-to-all model, which delivers real-time access to liquidity for participants across the yield curve.
OFTRs comprise more than 98% of notional outstanding but less than 32% of daily trading volume in the $17-plus trillion U.S. Treasury market, according to U.S. Treasury and FINRA data. The enhanced OpenDoor platform addresses this liquidity imbalance – in part caused by shrinking dealer balance sheets and concentration of trading among fewer market makers – by allowing all participants to trade with each other anonymously. As a result, institutional investors will now get a ‘first look’, unconstrained by any requirement to divulge size, direction or price before executing a trade.
Further enhancing the OpenDoor offering, the platform is integrated with Bloomberg’s Fixed Income and Derivatives EMS (TSOX), facilitating connectivity to an additional 90 order management systems and over 900 new accounts.
“We have worked tirelessly with our partners to deliver connectivity, clearing solutions, software and trading protocols that provide a level playing field to all institutional participants, allowing them to anonymously source and trade large blocks of Off-the-Run Treasuries and TIPS,” said Susan Estes, CEO, President and co-founder of OpenDoor. “By doing so, we are providing fixed income investors innovative new ways to access disparate pools of liquidity, taking significant strides towards addressing a persistent industry-wide issue.”
“We are thrilled to collaborate with OpenDoor. This transformative initiative fills an important gap in the market and seeks to service sections of the U.S. Treasury curve that electronification has yet to reach. State Street Global Markets is committed to working with its partners to find new and exciting opportunities like this to deliver access to the market in a seamless and innovative way,” said Kate Lowe, Head of State Street Fixed Income Clearing.
The OpenDoor platform currently has over 70 buy-side firms and numerous dealers trading for their own accounts. The new platform and protocols being offered will facilitate increased direct interaction among buy-side accounts, while still offering the sell-side the opportunity to interact on a level playing field. Prior to its initial launch in April 2017 as a session-based, all-to-all platform, buy-side accounts had no method for connecting directly with other buy-side accounts.
