By: Vitaliy Kozak, Chief Product Officer, Octaura

Collateralized Loan Obligations (CLOs) have become a fixture in the global credit markets, providing both yield and diversification for institutional investors. Despite their growing prominence, the secondary trading of CLOs remains encumbered by a host of inefficiencies. The market is notoriously opaque, with price discovery hindered by fragmented communications and a lack of trusted and standardized data. Trading processes are often manual, reliant on emails, phone calls, and spreadsheets, leading to considerable delays, higher operational risk, and limited scalability.

Key Challenges in CLO Secondary Trading

• Outdated Workflows: A majority of trading takes place via CLO BWICs. This outdated trading protocol results in major inefficiencies, as it is time-consuming and, as a result, has very low probability of trading for bidders.

• Limited Transparency: The absence of a centralized trading platform means buyers and sellers must navigate a web of intermediaries, often without clear visibility into real-time pricing or market depth.

• Liquidity Constraints: Fragmented information and disparate trading networks make it difficult for market participants to find counterparts, resulting in widened bid-ask spreads and missed opportunities. CLO secondary trading, standing at $200 billion per annum, is very low compared to the market size of $1.2 trillion.

• Outdated Reporting: CLO reporting is generally 30 to 45 days delayed, forcing market participants to find stop-gap solutions to monitor performance and price CLOs conservatively in lieu of live data.

Pioneering efficiency through innovation

Octaura aspires to redefine how CLOs are traded in the secondary market. Recognizing the importance of transparency, speed, and connectivity, Octaura’s platform addresses the root causes of inefficiency and empowers both investors and dealers.

• Centralized Electronic Platform: Octaura aims to create a unified trading hub, connecting buyers and sellers directly and providing instant access to comprehensive market data.

• Efficient Workflows: By digitizing every step of the trade lifecycle—from price discovery through execution—Octaura can significantly reduce the time to analyze and trade CLO tranches.

• Enhanced Transparency: Real-time pricing and streaming dealer runs enhance market clarity, enabling better decision-making and tighter spreads.

• Data Integration: Octaura is bringing Data and Analytics where and when you need it most. Octaura’s Data and Analytics offering will be tightly integrated into trading workflows, enabling customers to make more-informed decisions.

One size doesn’t fit all

We understand that a single protocol will not fit every user’s workflow. That’s why we’re bringing to market a variety of protocols and customization tools that still bring standards to this complex market. For example, the List protocol on Octaura’s CLO trading platform applies the principles of the market’s “best foot forward” workflow, with the option to counter on dealer levels received. This protocol will soon be enhanced with functionality that enables sellers to progress top responders (similar to the market’s “top three” workflow) as well as the ability to continuously request price improvements from counterparties.

We’ve implemented the diligent process of understanding existing workflows in the market so we can not only replicate them but enhance them for the betterment of the industry.

Looking ahead

Octaura’s vision goes beyond electronification of existing market. We are looking to grow it. The current secondary market stands at $200 billion volume annually – which is very low compared to market size of about $1.2 trillion. A combination of outdated trading protocols and structural challenges make further growth difficult. The most glaring example is selling compared to sourcing risk – you can sell a large portfolio of CLOs in a day by sending out a list of multiple lists. However, if you are trying to source large portfolio of CLOs, it can take weeks.

At Octaura, we understand these challenges and are dedicated to addressing them through collaboration and cutting-edge solutions. Octaura is poised to unlock new avenues of growth for investors and issuers alike, helping the CLO market reach its full potential.

In a world where speed, data, and connectivity define success, Octaura stands ready to deliver the next evolution in CLO secondary market trading.

Octaura 2025. All Rights Reserved. This marketing material is provided by Octaura for informational purposes only.  It is not intended as an offer or solicitation for the purchase or sale of any financial instrument. All investments involve risk, and past performance is not indicative of future results. The data contained on this page is provided for informational purposes only and is not intended to provide, and should not be relied on for, accounting, legal or tax advice or any general or specific investment recommendation.