Making Markets Jonathan Birnbaum: Modernizing the Bond Market - [Making Markets, EP.56]
Mar 14, 2025
In this conversation, Jonathan Birnbaum, Founder and CEO of OpenYield, discusses his mission to modernize fixed income trading. He breaks down the challenges of bond trading, including attracting liquidity providers and overcoming technological gaps compared to equities. Jonathan also highlights the rise of new market participants and the significance of algorithmic trading. Additionally, he shares insights on the transition from traditional voice trading to electronic platforms, signaling a pivotal moment in the evolution of the bond market.
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Equity vs Fixed Income Markets
- Equity markets offer a seamless, fast, and transparent trading experience that fixed income lacks.
- Fixed income markets lag by about 20 years but have great potential for modernization and efficiency gains.
Why Fixed Income Lags Behind
- Fixed income markets face greater complexity and fragmentation than equities due to numerous bond issues.
- Technological and regulatory catalysts present in equities have been slower to materialize in fixed income, delaying innovation.
ETFs Spark Fixed Income Innovation
- ETFs introduced new participants skilled in complex, basket trading that accelerated fixed income market electrification.
- Market liquidity providers now include both traditional banks and principal trading firms driven by quantitative models.