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DirectMatch unveils a new bond trading platform


oddballstocks
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I've seen some chatter about this company in the past and they were profiled on TechCrunch this morning: http://techcrunch.com/2015/02/15/yc-startup-direct-match-aims-to-make-bond-trading-as-easy-as-stock-trading

 

In short this start-up is trying to build an exchange for bond investors where everything will be transparent.  The goal is to drive fees down.  They aim to make money by selling research on their marketplace.

 

This fascinates me on a few levels.  The first is that they're trying to break into a notoriously closed and non-transparent market.  My sense is fixed income players like the lack of transparency because that's how money is made.  Secondly DirectMatch is facing the network effect issue.  They need to have a market with enough liquidity that new players become interested, but the only way for a player to become interested is either with a fee-incentive or enough other volume.

 

If these guys can crack this problem there is a lot of runway in terms of profit potential.  I'm skeptical if they can do it.  Current market players have a lot of incentives to remain entrenched.

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