FinTech start-up aims to transform the primary bond market

22 May 2019

Newtrex, a financial technology start-up, has launched an electronic auction platform for the primary bond market. The new platform leverages the latest technologies in the market to – according to the firm’s founders – radically improve the way bonds are being brought onto the financial market and traded. 

At the helm of Newtrex stand two experienced bankers and now entrepreneurs that have the ambition to make bond issuance transactions “easy and fun again”. Torsten Elling previously spent over 15 years at Barclays. In his most recent role as Co-Head of the bank’s European Rates Syndicate, he was responsible for the supranational, sovereign and agency (SSA) activities, as well as covered bond issuance and primary trading. The Dutchman Martin Nijboer worked for more than 20 years in various functions at Netherlands’ largest bank ING, holding roles including CFO Equity Markets, Head of Securitisation and Head of Long Term Funding. 

After exploring their idea for months in 2017, in the next year the duo took their shared concept to the next level. Elling and Nijboer spent the first half of 2018 designing and prototyping their solution for electronic auctioning – fast forward one year of hard work, and their ambition has become reality. Today marks Newtrex’s own D-Day, with the solution formally opening up to customers globally. 

Aimed initially at frequent borrowers and institutional investors (other issuers and investors will be able to join the platform at a later stage), Newtrex promises to make the issuance of international benchmark transactions “much quicker and more cost efficient”, while offering investors “more easy and transparent way to invest into new issues during bond auctions”. Meanwhile, all users, including dealers and regulators, will be able to use the same user-friendly platform for their respective interests.

FinTech start-up aims to transform the primary bond market

Last year, the market for bond issuance in Europe’s financial market exceeded a staggering €1 trillion in value, however, it can currently take up to several days for bond introductions to be completed. This is mainly due to the fact that current workflows between issuers and investors are manually transmitted via the dealer network. As a result, investors have to wait to see their actual allocations and optional hedges, while market participants and regulators lack the real-time transparency to make optimal decisions.

A state-of-the-art technology combined with agile new issue processes and optimised workflows (including three-way communication) means that Newtrex’s solution is able to dodge legacy in order to offer a “revolutionary solution”, according to the co-founders. Newtrex’s solution and the underlying algorithm has been patented by the founders, and to safeguard operations the company has been granted a license to operate from the AFM, the Dutch regulatory authority for the financial services sector.

A collaborative effort

Newtrex’s development was supported by Synechron, which was involved with the full delivery life cycle, from ideation and design to prototyping and full solution build. Drawing on its experience in capital markets and bond trading, as well as building and implementing trading technology platforms, the consulting firm programmed and delivered the platform. The firm’s business consultants meanwhile project managed the process. Synechron’s Financial Innovation Lab in Amsterdam facilitated the design and innovation process. 

“Synechron is proud to have helped develop this revolutionary FinTech platform with the latest, cutting-edge technologies,” said Jarno Droog, a Director at Synechron in the Netherlands, who has over a decade of experience in the financial services industry.

Reflecting on the collaboration, Elling said he looks back with great pleasure at Synechron’s enthusiasm and expertise across business consulting and IT development. “It gave us the opportunity to develop our ideas into reality.”

On the back of the cooperation, the two companies have agreed to continue their working relationship going forward. Synechron will support Newtrex’s next stage of digital growth, which includes the delivery of more functionality, including an added cloud version, the ability to connect to bond trading systems and external data sources, the addition of predictive analytics and modelling, and the use of blockchain functionality to enhance transparency across transactions.