Deutsche Boerse invests in bond trading platform Trumid: sources

The plaque of the Deutsche Boerse AG is pictured at the entrance of the Frankfurt stock exchange. PHOTO: REUTERS
The plaque of the Deutsche Boerse AG is pictured at the entrance of the Frankfurt stock exchange. PHOTO: REUTERS

NEW YORK (REUTERS) - German exchange operator Deutsche Boerse Group has made a US$10 million (S$13.8 million) investment in Trumid, a New York-based financial technology startup that runs an electronic corporate bond trading platform, people familiar with the deal said.

The companies plan to disclose the investment on Monday (July 10), said the sources, who spoke on condition of anonymity because they were not authorised to speak publicly.

Trumid, which is backed by venture capitalist Peter Thiel and investor George Soros, will also announce that it will collaborate with Deutsche Boerse to develop products and services for the European market, the sources said.

Deutsche Boerse's investment is an add-on to US$28 million raised by Trumid earlier this year from investors including Chinese financial firm CreditEase.

Founded in 2014, Trumid is one of a spate of electronic bond trading platforms set up in recent years to help ease the liquidity crunch in fixed income markets.

Stricter capital requirements imposed in the wake of the 2008 financial crisis have made it more expensive for banks to act as market makers in corporate bonds, making it harder for asset managers to trade.

Trumid, which acquired competitor Electronifie earlier this year, hopes to facilitate trading by enabling asset managers and brokers to transact directly and anonymously with one another on its platform.

The company plans to expand into Europe to extend its offering to its 350 institutional clients, many of which operate globally, one of the sources said.

This is not the first time that Deutsche Boerse has taken an equity stake in a fixed income trading startup, having backed London-based Bondcube in 2014. Bondcube, however, filed for liquidation in July 2015, three months after its launch.

Many of the bond trading platforms launched in recent years have struggled to gain significant traction, in part because of their inability to persuade buyside traders to negotiate prices with each other, in a marketplace where they were traditionally used to letting brokers negotiate prices on their behalf.

As many of the platforms make money by charging fees on executed trades, their revenues rely on engaged traders and successful negotiations.

Roughly US$1 billion worth of bonds were traded on Trumid in the month of June.