Trumid, SGX Asia bonds JV faces uncertain future

A start-up bond exchange that hoped to be “the missing link” between Asian and US bond markets looks to have been all but ended by its backers, with almost all staff leaving and its operations effectively mothballed.

Trumid XT, a bond platform backed by Singapore Exchange (SGX) and US bond exchange Trumid, aimed to bring together liquidity from the former’s Bond Pro and the latter’s Market Center fixed income platforms. But amid continuing delays to a planned launch, and despite having onboarded more than 100 clients, the platform’s backers appear to have grown frustrated and pulled the plug.

“All operations, product and technical staff have been released from the joint venture,” says a person familiar with the matter. “The entity will remain as a shell, with only one or two caretaker staff.”

The JV, called XinTru, was also backed by Chinese investment firm Hillhouse Capital.

A spokesperson for SGX confirmed the lay-offs. “SGX Group, Trumid and Hillhouse Capital have reduced employee headcount at our proposed joint venture, XinTru,” the exchange says in a statement to WatersTechnology’s sister publication Risk.net.

“While we remain enthusiastic about the opportunities in fixed income trading in Asia, the transaction is subject to conditions which are taking longer than expected to complete. As such, XinTru has decided to take the practical and prudent route to adjust its operations at this time.”

Of the entity’s roughly 24 staff, it is believed around half will now take up similar roles at SGX and Trumid itself. It is understood the bourse’s 100-plus clients were informed of the decision on April 22.

Formed last year amid much fanfare, the JV went on a costly hiring spree for talent, luring a number of fixed income managing directors from banks and brokers in Singapore and Hong Kong. Ben Falloon, who served as the platform’s chief revenue officer, previously headed fixed income at Morgan Stanley, while Mark Leahy, who headed fixed income at SGX, was chief operating officer.

“The JV [has] fizzled,” says a senior trader at one large Asian bank, adding: “SGX, I heard, simply doesn’t want to fund it.”

Others say the issues were more fundamental. “The problem was not that SGX wouldn’t fund it. The problem is that the three JV partners could not come to an agreement, over many aspects, to agree to move ahead,” says the person familiar with the matter.

Hillhouse Capital did not respond to a request for comment before publication.

People familiar with the project say the JV partners remain optimistic about the prospects for pulling disparate pools of liquidity in Asian bond markets onto an electronic platform.

“SGX could build their own platform, Trumid could launch their platform in Asia in the future, even a collaboration in the future could take place, but the JV as envisaged is not moving forward,” says the person familiar with the matter.

The likelihood of any future launch is far from certain, however. “SGX has more than 100 Bond Pro clients that they want to maintain. Trumid has a multibillion-dollar valuation. It’s in no-one’s interest to say, ‘The JV has failed’, but it certainly isn’t moving ahead as intended,” says the person familiar with the matter.

SGX remains a sizeable investor in Trumid itself, having led a $53 million funding round in 2018, while Hillhouse Capital also took a minority stake in Trumid in 2019. A successive funding round saw the likes of BlackRock, TPG and T Rowe Price invest in Trumid, in an October 2021 round that valued the company at $2.4 billion.

Trumid’s core US bond offerings have grown rapidly since its 2015 launch, amid a scramble among firms to bring all-to-all trading to fixed income markets following waning risk and liquidity capacity from dealers. The firm announced record average daily trading across its lit and dark protocols of $2.2 billion during March 2022 amid roiling bond markets, up 30% from the previous month, and up 79% from a year earlier.

The firm, which boasts some 629 clients, has launched collaborations with the likes of Nasdaq and Goldman Sachs to expand its offerings, as well as launching emerging-market bond trading last year.