WHAT IS OPENDOOR?
OpenDoor Trading, LLC is an independently owned company that through its wholly owned subsidiary OpenDoor Securities, LLC (“OpenDoor”) has designed a unique and cost effective platform enhancing liquidity across the principal pain points in US Treasuries. OpenDoor unlocks liquidity in the U.S. Treasury market via an anonymous, sponsored, all-to-all, session-based platform where institutional investors, traders and dealers reduce costs by trading at mid-market levels or better, with zero information leakage.
WHAT ARE THE KEY BENEFITS?
OpenDoor offers superior execution, better liquidity and anonymous trading. Unlike RFQ systems, Single Dealer Platforms, and Central Limit Order Book models, OpenDoor directly connects buyers and sellers through a new session-based trading protocol, providing open and equal access with no price discrimination. Joining the OpenDoor platform is free; no monthly access or subscription fees associated.
WHAT SECURITIES TRADE ON THE PLATFORM?
OpenDoor is a session-based platform for trading in US Treasury securities. The platform volume matches buyers and sellers in Off-the-Runs (OFTRs) and TIPS. Short Coupons and Bills will be added to the platform in Q1 2018.
HOW IS IT DIFFERENT?
OpenDoor is the only sponsored all-to-all session-based platform focused on market making in OFTR Treasury Securities and TIPS. While the solution in the past has been sell-side driven, the future must integrate the buy side for additional liquidity. all-to-all makes buy side an integral player in this process while the session-based system channels liquidity at particular points in time.
CAN ANYONE JOIN?
The OpenDoor platform is open to Sponsors that are FICC netting member’s. End user’s clear via their Sponsors. Anyone can join the join the platform. However, there is a $10 million minimum order size for Treasuries and $5 million minimum order size for TIPS.
HOW DOES IT IMPACT MARKET STRUCTURE?
Post-crisis financial regulation, low interest rates, years of unconventional monetary policy, and technological innovation represent a confluence of factors reshaping a Treasury market whose method of trading has changed little over the past several decades. With risk based capital and balance sheets sharply diminished among traditional market makers, the cumulative effect is reduced liquidity across the curve. On-the-run liquidity is unusually shallow, OFTR liquidity has decreased even more significantly, and the risk of financial instability has arguably risen. This makes the market ripe for the OpenDoor market-based solution, one that provides balance sheet compression, lower transaction costs, and greater liquidity.
HOW MUCH DOES IT COST?
Users incur no cost to access the OpenDoor platform. Participants pay a volume-based transaction cost that is included in the clearing price of the transactions in OFTR’s and TIPS. They realize significant savings by transacting at a mid-market price.
HOW DO THE TRADING SESSIONS WORK?
Our trading protocol is low-frequency by design. By channeling trading to specific points in time, participants can leverage liquidity that would otherwise be diluted across the trading day. The volume matching session consists of a Pricing Phase that contains a unique combination of streaming quotes, participant entries, historical data and algorithmic calibration to achieve optimal midpoint prices. The Pricing Phase is followed by the Breathing Phase and the Matching Phase. The Breathing Phase provides users with the opportunity to evaluate the mids and stage orders to be submitted into the Matching Phase. Orders entered during the Breathing Phase will have time priority over orders entered once the Matching Phase has begun. The Matching Phase is a continuous, confidential process enabling relative value traders to capitalize on anomalies in the curve. The trading session is measured in minutes, has zero information leakage™, and trading protocols ensures maximum participation within posted executable liquidity.
HOW IS THE PLATFORM DELIVERED?
Users login to the OpenDoor platform through a secure web-based portal.
ARE ORDERS EVER ROUTED TO THIRD PARTY TRADING VENUES?
No. All orders and transactions are matched with other members on the OpenDoor platform.
IS OPENDOOR THE COUNTERPARTY TO THE TRADE?
No. OpenDoor is a trading platform that matches buyers and sellers.
DO YOU PROVIDE FULL STP?
Yes. As soon as the platform matches a trade, participants receive an electronic notice of execution in the format of their choice, FIX, CSV file via email, CSV file via ftp, Bloomberg VCON. Participants get to choose the format that easily populates their risk and settlement systems.
WHO CREATED OPENDOOR?
A core group of successful industry executives have come together to leverage their experience in investment banking, trading, government, central banking, portfolio management, technology and development of liquid trading systems. As a new entrant with these skills and relationships, the team operates without the constraint of operational boundaries. Operating at the intersection of electronic trading, volume matching trade protocols and automated trade processing, OpenDoor’s management team is uniquely qualified to deliver solutions quickly and cost effectively.
WHO OWNS OPENDOOR?
Owned by the employees of OpenDoor and non-market participant investors. OpenDoor is a majority female owned firm.