Behind the Scenes of Origin’s Expansion into Asia

Last week Raja blogged about Origin’s global ambitions. This week I’d like to provide a bit more detail on our plans for the CD market in Asia and specifically the technology that’s powering our expansion eastward.

Change is Coming

In the coming months, we’ll be conducting a “Proof of Concept” focused on the fast-growing Asian CD market with a select number of Issuers and Dealers in the region. This POC will help us validate the technology we’ve been building for the past 18 months with our customers – notably a full “front-to-back” workflow solution for originating and settling a CD transaction.

As we’ve regularly mentioned, we don’t believe in building cool stuff for the sake of it. So many startups are busy building products for themselves rather than their customers, and the vast majority – 42% of them – fail because there is no market need for their offering. So here at Origin, we only develop products once we have validated demand for them. This means listening to clients in order to truly understand their needs.

The Challenge Facing CD Issuers and Dealers

Luckily for us, the issuance process remains quite inefficient. The vast majority of issuers and dealers tell us they want to focus on doing trades, making (and saving) money and serving their stakeholders in the process. But they’re getting bogged down with the hum-drum complexities of the issuance process, especially documentation.

In the CD market a full suite of documents still needs to be manually produced, which is a real pain point. The CD market operates a bit like the MTN market in that there are termsheets, final terms, offer letters and dealer accession letters (for dealers not already on the CD program). Also, if the trade is being done in Singapore, a rather extensive RODS (Return on Debt Securities) document needs to be filed with the Monetary Authority of Singapore (MAS).

So, there can actually be more docs than what’s required in the MTN market. But at the same time, the velocity of the market is a lot higher, with some dealers doing 2-3 trades a day versus a handful a week, so automation is particularly important. Our solution automates everything, enabling our clients to focus on what’s important: the trade.

Under the Hood

We’ve been developing this set of features over the course of the last year. We actually demo’d the first version whilst visiting Issuers and Dealers in Hong Kong in October 2018, covering the 3 phases of the CD issuance process:

1. Pre-trade – Obtaining the CD funding levels.
2. Mid-trade – Producing indicative and final termsheets.
3. Post-trade – Documentation, including offer letters, dealer accession letters, CD pricing supplements and RODS

Speaking with my CTO hat on, this was really fun to build. We got a decent head start, repurposing a number of the components we’ve built over the years for the MTN market, notably around funding level sharing, our cross-currency pricer, and document generation.

Pre-trade Using the Power of APIs

The “pre-trade” workflow in the CD market is similar to the MTN world, but there is more data and it moves much faster. While MTN issuers might post out new funding targets on a bi-weekly or monthly basis, CD borrowers are posting funding targets daily (or even intraday). Dealers have to waste spend a lot of time collecting those targets from a variety of sources to then share with their salesforce.

To solve this, we utilise the power of our API. We have an excel macro which allows users to contribute their funding levels to Origin directly from their spreadsheet, which is very useful if you’re posting levels daily for a number of different currencies. Dealers have a choice and can consume the information via our front-end GUI, or also via API into their own spreadsheets.

We have also reused our cross-currency pricer for swapping funding levels from one currency to another by adding SGD, HKD and CNH to it. This is a really handy tool, loved by clients on both sides of the issuance process.

Generating Documents Using Templating Languages

The really exciting part is our ability to scalably generate all of the documents that are needed for a CD transaction. From the start, we’ve used the open source Jinja2 templating language, which comes by default with the Python web framework Django that we use. What is a templating language, I hear you ask? Templating languages were initially built for use in websites, where you have some logic on the backend and you want to output dynamic values, like so:

<h1>Hi {{name}}, </h1>
{% if favourite_team==”Arsenal”%} Did you know that Arsenal has won the Premier League 3 times?{%endif%}
{% if favourite_team==”Chelsea”%} Did you know that Chelsea has won the Premier League 5 times?{%endif%}

As you can see, name and favourite_team are variables that could be populated by anything. All programming languages use varying templating languages of different types/syntax. For all of our document generation, we simply put the templating language into MS Word documents rather than an HTML file (a website), allowing us to easily generate word docs and pdfs. This technology has been in use for a number of years now, and powers many of the document generation providers that are out in the market today.

A Word on Deployment

In Q2 2019, we’ll be launching this proof of concept in Asia in order to test the tool with selected dealers and issuers in the region. This process will last ~3-6 months and, upon completion, we will be rolling out the product. For anyone interested, please get in touch as we will have limited spaces to participate in the proof of concept.

Here at Origin we’re excited about the next phase of our development and growth. Our expansion into Asia is underpinned by deep consumer insights and a pragmatic approach to technology that puts our clients at the centre of platform development. By focusing on solving real challenges and frustrations for issuers and dealers, we expect deployment of our comprehensive pre-through-post trade solution to further drive growth in Asia and beyond.