Making Markets · Colossus | Investing & Business Podcasts

Jonathan Birnbaum: Modernizing the Bond Market - [Making Markets, EP.56]

·43 min·2 clips

A Reg NMS-style rule for fixed income could force best execution across bond venues.

1. Making Markets with Eric Golden focuses on John Birnbaum and OpenYield’s attempt to modernize fixed-income trading. 2. Eric Golden is the host and CEO of Canopy Capital, and John Birnbaum is the founder and CEO of OpenYield. 3. The episode asks how bond trading can move toward the equity market’s visible prices, connected venues, and best-execution rules. 4. Birnbaum says equities are now “kind of magical” because anybody can open a brokerage account and trade at the best lit price or better under Reg NMS. 5. He contrasts that with bonds, where a buyer often has to ask for a price, trading is negotiated, and markups are higher. 6. He says fixed income is roughly two decades behind equities, but that gap creates opportunity for new technology. 7. Birnbaum says the old Wall Street secondary market was dominated by large firms that supported primary issuance and collected relationship-driven fees. 8. He says ETFs changed the market by bringing in firms skilled at basket trading and creation-redemption arbitrage, including Flow Traders. 9. He says the move toward electronic fixed-income trading has spread across rates, investment-grade credit, high yield, and munis. 10. He says treasuries, corporates, and munis follow different adoption cycles because liquidity, reference data, and security structure vary. 11. Birnbaum cites a SIPMA adoption-cycle chart from his Bridgewater days and says the more liquid an instrument is, the easier it is to electronicize. 12. He says the muni market has over a million CUSIPs, which makes reference data and pricing logic a core engineering challenge. 13. He says OpenYield fits alongside marketplaces, direct-connect platforms, and multi-dealer platforms, but focuses on 100% firm prices and an all-to-all model. 14. He says OpenYield is preparing a “request for order” protocol that would let dealers populate bids and offers automatically when someone views a bond. 15. He says the platform targets retail brokers, advisor platforms such as LPL, Raymond James, and Edward Jones, and asset managers building SMA businesses. 16. He says solving the cold start problem required partnerships with strategic liquidity providers before the venue could show buyers competitive prices. 17. The conversation has a practical interview style, with Eric Golden pressing on market structure, fees, EMS adoption, and how execution works across venues. 18. Birnbaum answers in a product-and-market-map style, using examples such as Bloomberg, MarketAxess, Tradeweb, and API-first connectivity. 19. People who follow market structure, bond trading, or fintech infrastructure would likely want this episode. 20. People looking for a casual investing chat without market-structure detail may skip it.

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