By: Brian Bejile, CEO, Octaura
At Octaura, we’re transforming how the leveraged loan market operates. As we approach the one-year anniversary of launching our loan trading platform, I cannot help but reflect on the front-row seat we’ve had in witnessing how adoption of digital platforms along with real-time data and analytics are injecting transparency and efficiency into our industry.
There has been strong momentum in Octaura’s online marketplace since launching in April 2023. There are now over 100 buy-side participants on the platform and 15 dealers contributing to the liquidity of the market. The platform has seen a wide range of participation – the feedback we’ve heard is that dealers have found significant efficiencies saving both time and money, while buyside clients have found use cases supporting portfolio management, trading and analyst workflows as well as efficiencies in the middle and back office.
We’re committed to building a solution that reflects the needs and workflows of our customers while also bringing transparency and efficiency to the market. In the past year, one of those key customer asks was a protocol that supported trading lists of several loans quickly and easily. In October, we launched the List protocol and since then, we’ve seen usage of the protocol continue to grow as users look to leverage the workflow to clean up odd lots, send a list of names to single dealers, and more.
Now, we are consistently seeing sustained growth in platform liquidity, inquiry and trade volumes, supported by the growing dealer community. Over the past year, 15 dealers have been active on Octaura, representing nearly 90% of the loan market’s liquidity1 . With several more market-making desks in the onboarding process, we’re looking to capture all the liquidity providers that clients have been asking for in the coming months.
We also passed an exciting milestone in February 2024. In our estimation, nearly 1% of the leveraged loan market trading electronically took place on Octaura.
It took nearly 10 years for 2% of high yield market volume to execute electronically2. And while the corporate bond market certainly paved the way for other, less liquid asset classes in the fixed income market to adopt electronic trading, we consider this quick adoption to be a clear marker of industry readiness, and we look forward to continuing an accelerated trajectory.
With platform adoption comes demand for workflow efficiencies, more functionality and even better insight into the market. We’re focused on these core areas to ensure we’re creating a fit-for-purpose solution that the market adopts and loves to use:
End-to-end connectivity. We’re working with leading OMS providers to offer a complete solution for our buyside users. Imagine never having to book a trade again or being able to stage orders and execute all in one place – that is the vision, and work is being done with leading Order Management Systems to make that streamlined workflow a reality. You’ll hear more about this very soon.
Real-time data and analytics. As we aggregate more market-wide data, we’re now able to help quantify loan liquidity, enabling users to track changes to the relative liquidity on loans they are focused on, as well as the universe overall. Octaura expects the electronification of the loan market to be a boon to market liquidity and will also afford the market with data and insights unique to the marketplace. This is just the beginning of a suite of data and analytics solutions in the works that aim to help our users make more-informed investment decisions.
Features and functionality to support more workflows. You may have seen the news a few weeks ago that we launched watchlist and alerts, empowering traders, PMs and analysts to better monitor the credits they care about, set alerts, and initiate trading activity all with a few clicks. It’s features like these that we are dedicated to creating based on input from our users – do you have feedback on the platform? I’d love to hear from you.
We’re excited to have you with us on our journey as we continue to evolve the leveraged loan market. Here’s to another big year!
1 Dealer market share is estimated based on Octaura conversations with the market.
2 According to Coalition Greenwich research, in 2013, 2% of the HY corporate bond market traded electronically. MarketAxess was actively offering HY corporate bond trading in 2004.
Data is sourced from Octaura unless otherwise footnoted. References to Q2 2024 are YTD, as of April 17, 2024. While we strive for accuracy, we do not guarantee the completeness or correctness of the information provided or for the results obtained from the use of this information. This communication is not a recommendation to buy or sell any loan product and should not be construed as such. Features are accurate as of the date presented and subject to change without notice.