Bonds.com, a central marketplace for fixed income trading, said today that industry veteran Michael Sacks has been named head of technology as the alternative trading system moves to grow the user base on the buy and sell sides.
“My No. 1 mission at a high level is to grow revenue. The way we’re going to do that is to increase the speed with which we can deliver features,” said Sacks in an interview this morning. “We have big plans in terms of numbers of users and products and to satisfy those plans I’ve got to bring features to market at a faster pace than we currently can,” Sacks explained.
Bonds.com, a wholly owned subsidiary of Bonds.com, Inc., a registered broker-dealer and alternative trading system (ATS) offers live liquidity with 70,000 live prices and execution on 12 thousand different issues from over 300 contributing counterparties through its web-based electronic BondsPRO platform.
According to George O’Krepkie, president of BCI, Bonds.com currently has about 1,000 users executing about 1,000 trades a day, and is looking to increase that to 5,000 users a day on the platform.
Sacks joined Bonds.com in early July. He was previously head of application development and QA (quality assurance) at MarketAxess, an electronic platform for fixed income securities trading. He worked at Morgan Stanley from 1994 though 2004, where he served in a series of senior positions including: global head of bond technology, chief operating officer of fixed income technology and global head of foreign exchange technology. Sacks started his career at IBM Research, and then moved onto Salomon Brothers, where he was part of a team of developers that built an interest-rate swaps middle-to-back office system. When he joined Morgan Stanley in 1994, the firm was rolling out a front-office derivatives system. “I went from derivatives to FX to bond technology,” says Sacks, who holds an MS in computer science from The Columbia University School of Engineering and Applied Science and a BA from Harvard College.
Sacks has joined Bonds.com at a time when automated fixed income trading is gaining momentum on Wall Street, and some firms are starting their own platforms. “I think it’s being driven by regulatory reform and the Volcker Rule,” says O’ Krepkie. Since the Volcker rule bans proprietary trading by banks for their own accounts, it has caused banks to reduce their inventories of bonds, which has reduced liquidity. “The buy side now which his ten times the size of the sell side is looking at how to source liquidity in 2013 and 2014,” said O’ Krepkie. “The reality is another buy side shop could be providing liquidity," he suggested. In reaction to these issues, BlackRock has started its own fixed income system for pension fund clients firms, while Vega Thi a European-based platform is also for the buy side. In addition, there are single dealer systems such as Goldman Sachs’ G Sessions and Morgan Stanley Bond Pool.
While brokers are offering single-dealer systems, O’Krepkie said: “We believe that a neutral entity, all-to-all, is what is going to win at the end of the day.” In Bonds.com’s model, anybody can be the market maker, put a bid or offer in the marketplace “We’ll let everyone connect to us,” he said, noting there is full transparency.
But unlike some of the new systems coming out of beta and others that are on a white board, said O’ Krepkie, “We’re actually operating and looking to grow,” said O’ Krepkie.
To grow the platform, Bonds.com will be looking at new asset classes and probably will make some announcements in the fall, says O’ Krepkie. Secondly it will look at how to create new tools for the current user set in the credit markets. Sacks said he is focusing on the needs of large buy side clients and prospective sell side clients.
“The larger buy side institutions have a different set of needs than the larger sell side ones,” said Sacks. “We have two user interfaces that are in development in parallel right now. Both of them are targeted at the buy side and they will be more user friendly than what we currently have,” said Sacks.
In terms of rolling out new features, Sacks said, “We have an extremely agile style of development. The key is to continue to evolve features fast, get them in front of customers and just get a steady stream of features that we make available to users.”
When he was approached to join the company, Sacks saw this as an “exciting opportunity,” he said. Since joining the company, many people have come to talk with him. “There’s huge excitement coming off this vibrant market that the company has created."