(Bloomberg) -- The joint venture between Wall Street’s biggest banks that’s looking to revolutionize the way new corporate bonds are marketed and sold plans to start testing its platform with select buyside clients in the first quarter of 2020.
The newly named DirectBooks LLC -- backed by JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Barclays Plc, BNP Paribas SA, Deutsche Bank AG, Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co. -- will initially focus on U.S. dollar-denominated investment-grade corporate bond offerings before expanding into other fixed-income assets, according to a statement released Friday.
Richard Kerschner -- a former Nymex, CLS and ICAP/NEX Group executive -- has been named chief executive officer of Primary Markets LLC, the holding company for DirectBooks.
Wall Street is looking to modernize the process of buying new corporate bonds while retaining control of a lucrative business that’s being eyed by various technology startups. DirectBooks’s platform will allow dealers and investors to correspond directly and share pricing data, term sheets and allocation information, a step forward for a market that still relies on phone calls, instant messaging and emails to handle billions of dollars in orders.
“This will alleviate challenges for both underwriters and investors,” Kerschner said in an interview. “We’re improving the communications process for primary issuances.”
All nine shareholders are either on the DirectBooks board or have observer status.
Kerschner, who is also a board member of Cloud9 Technologies LLC, a voice communications fintech company, started working with DirectBooks in June. He said that the company is engaging with interested investor clients, but declined to name any beyond BlackRock Inc. that are involved at this stage.
Bloomberg reported in April that BlackRock, as well as Invesco Ltd. and AllianceBernstein Holding LP, were among the initial buyside firms involved.
Read more: Wall Street Said to Accelerate Shake-Up in Market for New Bonds
Kerschner said DirectBooks, which has been over a year in the making, is actively hiring and plans to have a global footprint, starting with an office in New York. He declined to say how much headcount the company plans to add, or how much fundraising it’s done or plans to do in the future.
DirectBooks join an array of fintech startups developing products to modernize the market for newly-issued bonds, one of the last corners of finance to experience a digital makeover.
IHS Markit Ltd.’s Investor Access system allows traders in Europe and Asia to order bonds electronically. While the platform is growing with more than 300 asset managers signed up, plans to expand into the U.S. have fallen short due to the launch of DirectBooks.
London-based Nivaura is seeking to automate parts of the new-issue process like producing detailed bond prospectuses. The firm, which raised $20 million in seed funding earlier this year and has made some high-profile hires from Citigroup and HSBC Holdings Plc, is seeking to cut the cost of issuance and reduce settlement times.
Bloomberg LP, the parent of Bloomberg News, provides services that facilitate bond ordering and distributes information on new debt offerings.
(Updates to include full list of banks in second paragraph)
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