Welcome to the latest episode of At the Forefront: Fintech Conversations!
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In this episode, Forefront VP & Head of Content Sam Belden sits down with Jonathan Birnbaum, founder and CEO of OpenYield, a new fixed income marketplace making it easy for brokers, advisors and fintechs to offer attractive bond investing solutions to their clients. Sam and Jonathan discuss the state of today’s bond market, the vision behind OpenYield and the firm’s plans for an official launch in Q1 2024.
To start, Jonathan explains why now is the right time for OpenYield to come to market. Currently, demand for bond investing solutions is on the rise due to increasing interest rates, with investors seeking out fixed-income instruments with risk-free yields north of 4%. There is also a supply-side catalyst, with the bond market itself becoming increasingly electronic with an increase in algo-enabled liquidity providers. These trends, combined with the increasing number of wealth managers seeking to offer bond investing for the first time, have created a true surge in demand.
Next, Jonathan walks listeners through the benefits of OpenYield’s marketplace, which aims to make bond investing more accessible and less costly. To date, most bond marketplaces have been marked by high minimum lot sizes, arcane fees and a limited capacity for integration. OpenYield is changing the paradigm by partnering with algo-enabled liquidity providers (who are permitted to offer only firm, executable quotes), allowing tickets of any size and offering a curated set of the most liquid bonds. All these features are designed to remove barriers to entry in the bond market.
Jonathan goes on to explain that OpenYield is generally agnostic when it comes to its client base. The marketplace can be utilized by any firm that receives retail-sized bond orders, from retail brokers and fintechs serving self-directed investors to advisors and wealth management firms trading on behalf of their clients. Looking ahead, Jonathan is confident that these entities and their clients will embrace the benefits of investing in individual bonds, with companies like OpenYield working to provide the same reliable pre-trade transparency and instant execution that we take for granted in the equities market.
Lastly, Jonathan discusses his past career in the bond market and how it led him to found OpenYield. By working in senior trading roles at Morgan Stanley and Bridgewater Associates, he developed a keen understanding of the unique challenges that face each part of the bond market – buy side and sell side, maker and taker – and began to hone his vision for automating its antiquated processes. He closes the discussion by describing OpenYield’s talented team, which applies a breadth of capital markets and fintech experience to simplify fixed income investing and enable better experiences for market participants.
See below for a breakdown of what was discussed. Happy listening!
1:20 – The market and industry forces spurring OpenYield’s 2024 launch
2:47 – OpenYield’s marketplace and how it fits into the larger bond investing landscape
4:42 – OpenYield’s target audience/client base
5:40 – Aspects of the bond market in need of reform/improvement
7:10 – Jonathan’s experience as a bond trader and how it shaped his vision
9:35 – How the OpenYield team is turning its vision into reality