Direct Match
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Direct Match was a New York-based electronic trading venue for US Treasuries, founded in 2015 by CEO Jim Greco with former Direct Edge CEO Bill O'Brien as chairman. It aimed to break the banks' dominance of the $13 trillion Treasury market by offering hedge funds and asset managers the same anonymous, central-limit-order-book trading that banks and sophisticated electronic firms enjoyed. The company raised $9 million and secured commitments from about 60 clients ahead of its planned March 2016 launch.
02 / Direct Match FAILURE REASONS
Failure factors supported by the current evidence
CEO Jim Greco wrote that Direct Match's planned March 2016 launch failed when its strategic clearing partner pulled out citing conflicts of interest; without a clearing solution the venue could not launch, a replacement could not be assembled, and the existing firm/capital structure could not execute the all-to-all Treasuries vision.
The strategic clearing partner pulled out the week of first live trades; its CEO cited conflicts of interest, which Greco called a decisive blow.
Greco wrote that US Treasury clearing is an oligopoly owned/dependent on dealers, unlike NSCC-style open access in equities, so the firm could not assemble a clearing solution matching its all-to-all mission.
03 / EVENT HISTORY
Events in the structured record
- Product or service closed
Markets Media 25 Aug 2016 (opened): Direct Match turned off its CLOB Treasuries venue after losing its clearing partner; CEO said the original vision would not happen. Greco's 23 Aug 2016 Business Insider post (opened) said they could not execute the vision with the current firm. Later OpenBondX combination was announced then reported abandoned; not treated as a going-concern continuation of Direct Match's CLOB.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
Direct Match was founded in 2015 to build an electronic central-limit-order-book venue for US Treasuries, raising $9 million and signing about 60 clients; former Direct Edge CEO Bill O'Brien became chairman.
- 02
Weeks before the planned March 2016 launch, the strategic clearing partner pulled out, citing 'conflict of interest' (press reports named State Street) - fatal, because Treasury market access requires a bank for clearing and settlement plumbing, and no replacement partner was available.
- 03
Direct Match shut down in August 2016 without ever completing a single trade; the company explored options for its intellectual property. No reliable loss figure was disclosed, so no loss amount is recorded.