Fixed Income With A Twist: How 280 CapMarkets Leverages Cloud Tech To Increase Bond Market Transparency

In an interview with Benzinga, Gurinder Ahluwalia, co-founder and CEO at 280 CapMarkets, a fintech for bond markets, discussed increasing access and transparency in the fixed-income trading space.

The What

Founded in 2016, 280 CapMarkets is a tech solution for the fixed-income markets that started out as an idea envisioned by advisory and bond industry veterans.

The company combines traditional execution services via 280 Securities and cloud technology via 280 Technologies to deliver BondNav, a municipal and corporate bond marketplace for advisors and wealth managers.

The Why 

Typically, traditional independent advisors are at a disadvantage: they can’t access institutional-grade bond pricing and trading.

BondNav comes into the picture as a cloud-based, relationship-oriented interface that allows advisors and wealth managers to operate like an institution. Users have the ability to see the what investment-grade and high-yield bond offerings exist in the market.

“We put ourselves on the same side of the table as the advisor; [we] want to align our incentives with you,” Ahluwalia said.

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The How

280 CapMarkets runs an efficient ecosystem composed of a customer desk, an institutional desk that sells bonds to large asset managers and an in-house trading desk that uses its own money to buy and sell bonds.

BondNav “aggregates the retail offerings that are out there, and, at the same time, [runs] a sales and trading desk that works with the institutions from A-to-Z,” Ahluwalia said. 

On any given day, there are over 70,000 bond offerings displayed on the BondNav platform.

“I like to say 'Allstate to Vanguard.' If we work with those institutions, [they] will be able to post their offerings directly into the software.”

Costs 

Fees are competitive and dependent on maturity.

"We add $1 to any bond price and we fully disclose that. If it’s a year longer, we add $1. If it's less than a year, we add 50 cents," Ahluwalia said. 

Additionally, 280 CapMarkets will attempt to get better pricing on its end, splitting price improvements with advisors.

"If a bond is [ordered] at 102.1, then we try to buy that bond as cheap as possible; say we buy it for 101.5. We then take the $6 per thousand, and we split it: half with the advisor, half we keep." 

The firm is paid on the basis of how much money it saves for clients, he said. 

“We are incentivized to find [bonds] as cheap as possible. 70% of the time we are able to get price movement based on what we can see on our site.”

Product Improvements

The BondNav platform has evolved to fit certain niches or types of investment interests.

“We have filtering. As an advisor, if you have clients in California who are interested in single-A rated, or better, yield greater than 2% — whatever parameters you want to define — then we will notify you as things come, rather than having you search for it," Ahluwalia said. 

Other notable additions include one-click sales, in which advisors can quickly put bonds out for sale or receive quick bids, as well as the building out of portfolio monitoring and client management features.

Overall, the firm said it aims to build out its product suite by taking in feedback from advisors to improve pricing and bond management, therefore increasing liquidity in the fixed-income markets.

Going Forward: Expansion, Partnerships

“We are starting to look at middle markets as well," Ahluwalia said. "This model is not constrained to work only for a single advisor or team of advisors. It can scale up. That’s the beauty.”

280 CapMarkets is working to leverage its connections with advisory firms, brokerages and data providers.

"The more partnerships you have, the better off you are," the CEO said. 

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Photo courtesy of 280 CapMarkets.