Our investment in WeMatch — bringing electronic trading to OTC derivatives traders
Electronic trading continues its advance. WeMatch brings the last bastion of voice trading into the 21st century by providing tailored workflow and matching solutions for OTC derivatives.
We are thrilled to participate in the firm’s $19.5m Series B raise led by DB1 Ventures, with fellow co-investors Augmentum and J.P. Morgan.
The relentless electronification of trading
Five years ago, we backed fixed income e-trading start-ups AxeTrading & TransFICC. The thesis at the time was that fixed income products, such as government & corporate bonds, would go the way of equities & FX and move from voice traded to traded electronically. Add in MiFID II reporting & TCA requirements and this has largely been the case, especially for European government bonds & US treasuries.
“Occasionally, a halting, haphazard trend suddenly hits a point where it starts spreading like wildfire, and its success feels like it was always preordained. Electronic bond trading fits the latter category.” — Robin Wigglesworth, FT
However, the world of structured & exotic derivatives has remained largely voice traded to this day — 70% of dealer-to-dealer and 95% of dealer-to-client are traded this way. It is challenging to trade these products on venues due to their bespoke nature, anonymous trading protocols, and lack of standardisation. Large financial institutions spend over $6bn per year in broking commissions to transfer risks from their balance sheets.
WeMatch
The WeMatch platform offers agile technology that can be adapted to various products and use cases — from securities finance to equity and interest rate derivatives. Flexible negotiation protocols and matching algorithms allow non-standardised products to be traded electronically, bridging the gap between the voice traded world of the large inter-dealer brokers such as TP Icap, Tradition, and BGC, and the electronic platforms like TradeWeb and MarketAxess.
Credibility in building mission critical systems for this market does not come easy. The founding team at WeMatch — Co-CEO Joseph Seroussi, Co-CEO Gregory Mimoun, CTO Elie Slama, COO Laurent Benzaquine, and Head of EMEA David Raccat — combines decades of capital markets experience with technology know how and entrepreneurial hustle. With over two dozen of the world’s largest financial institutions already actively trading using WeMatch, the firm has demonstrated they are a potential market leader in the making.
We are excited to partner with the team at WeMatch and believe the firm has the potential to become a category defining market leader in the OTC derivatives space. We will apply our deep experience & connectivity in this sector to support the business in its next phase of growth.
