New-York-based fintech startup TruMid, a new frontier for corporate bond and CDS trading, announced the closing of the majority of a $27 million funding round led by Peter Thiel, who is joined by Soros Fund Management and Shumway Capital.
The current $27 million round is expected to fully close by year-end. The capital will bolster the e-trading platform’s ability to improve liquidity for all market participants. Shumway Capital led TruMid’s first external financing round earlier this year, which had then valued the startup at $75 million, according to sources.
TruMid is among more than a dozen firms trying to help make it easier to trade debt in the $7.7 trillion U.S. corporate bond market. Only a few days ago, Intercontinental Exchange Inc. (NYSE: ICE) announced the acquisition of Interactive Data Corp (IDC) for $5.2 billion heralding its entry into the corporate bond market, conceivably by way of an upcoming large-scale trading platform or exchange.
“Like its competitors, TruMid is operating in a market reshaped by regulations following the 2008 financial crisis,” said Bloomberg News earlier this year.
“We’ve borne witness to this scene before – necessity stirring the entrepreneurial zeal of electronic trading innovators. Many platforms stepped forward; few survived. Back then, the market’s message was clear: Solve a problem, or die trying. Given that the current issue facing everyone may be rooted in market structure, today’s innovators have their work cut out for them,” said earlier this year Anthony Perrotta, a veteran of the fixed income markets, and Principal, Head of Fixed Income Research, at TABB Group.
TruMid’s all-to-all system uses trading sessions called “swarms”, allowing anonymous and efficient interaction between its institutional users to drive mid-market pricing and best execution on round lot transactions.
Bond market veterans Chris Ruggiero, Mike Sobel, and Mike Martinic, from Goldman Sachs, Barclays PLC and Citadel LLC, had left their respective firms and co-founded TruMid a year ago.
TruMid aims to become an early leader in electronic trading, with many of the market’s top institutional investors trading on the platform. TruMid has 191 institutional clients live on the platform and nearly 400 more in the onboarding process. TruMid’s highly experienced team from the buy-side, sell-side and interdealer broker space has the relationships necessary to attract a critical mass to trade.
TruMid is a FINRA-approved broker dealer and SEC registered ATS operator of an electronic trading platform for round lots of corporate bonds and CDS. TruMid launched April 29, 2015 and was designed with the fragmented nature of credit market liquidity in mind. It is an innovative all-to-all marketplace where buy-side can transact directly and anonymously with other buy-side and sell-side participants alike.
The team is made up of credit professionals with decades of experience on the sell-side and buy-side. TruMid’s approach utilizes trading sessions called “swarms” to concentrate a critical mass of the most important users in the market in the same place at the same time. The idea is to let all market participants determine pricing, and through anonymity and protection of information, to unlock liquidity that may otherwise be on the sidelines. TruMid’s multi-stage trading protocol allows all market participants to reveal their full intentions with no information leakage, to collectively determine pricing in a transparent way, and to execute efficiently and anonymously at the market-vetted price. TruMid is currently trading high yield, distressed and investment grade securities and will be launching CDS in early 2016.