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Challenges that we specifically address through our solutions include:
- Inefficiencies in issuance, trading and post-trade processes
- Illiquidity in secondary markets and limited primary market issuance
- Limited access to markets due to high minimum transaction sizes
As with other asset classes, various institutions attempt to address these challenges through both end-to-end platforms and solutions that are more narrowly focused on specific components of the value chain as opposed to our approach to offering an end-to-end platform for the full lifecycle of the asset.
Given the fragmented, over-the-counter nature of secondary market trading, bonds will significantly benefit from XDEX as they’re easier to transform into a digital financial instrument, without requiring wholesale market transformation.
- The bond issuance process is highly manual and prolonged, with significant time required to issue and receive proceeds.
- Because secondary markets are largely over-the counter, liquidity tends to be fragmented, with limited ability to accurately price trades.
- Corporate bond markets tend to face limited secondary market liquidity overall, thereby limiting some investor interest and affecting cost of capital.
- Trading processes are largely manual, leading to significant inefficiencies and poor data quality for all participants.
- Relatively high minimum ticket sizes (given high transaction costs) exclude most retail investors.
- All parties retain siloed data structures, calculating payments and other transactions independently using reference data, thus creating inefficiencies.
- Extended settlement time frames add additional cost and risk.