It'll be a tough market to crack, largely due to its fragmented and illiquid nature (not to mention the structure that results from the role of the primary dealers). It might be the right time, with the regulatory restrictions being placed on the big/primary dealers' prop-ish market making activities but if the market does shift in the right direction for Direct Match (i.e. if liquidity shifts away from the primary dealers, if they agree to partake in a CLOB, or if, God forbid, the Treasury forces them to quote electronically, like the European governments do with MTS), I'd expect the existing players like NASDAQ and TradeWeb to be standing ready to jump in.
It's one of these markets that looks simple at first but there are lots of nuances that have caused it to take the shape it currently has. To be successful, I think Direct Match will need to do something a bit different than simply offering a CLOB.
It's one of these markets that looks simple at first but there are lots of nuances that have caused it to take the shape it currently has. To be successful, I think Direct Match will need to do something a bit different than simply offering a CLOB.