The DCM tech revolution is here
This week we sponsored and presented at the International Capital Market Association (ICMA) Fintech and Digitalisation Forum in London.
I chose to talk about Origin’s progress in 2023 and also about how far we’ve come as a business since our inception in 2015. I thought I’d share a summary of my remarks.
A long road
When Rob and I started Origin over 8 years ago, we were completely alone in pitching the vision that technology could transform the debt capital markets. Now it’s one of the hottest, if not the hottest topic in our industry (and the catalyst for many conferences and events). It’s fantastic to see how far we’ve come.
But, while there have been plenty of interesting headlines, and LinkedIn posts announcing exciting pilots, you may be wondering, when is technology actually going to change the way I do business day to day?
I’m here to say that thanks to Origin, the answer is: today.
In the first 11 months of this year, we processed 137 bonds across our platform, helping borrowers raise $26bn.
More than just volume
We worked with over 10 dealers, who in turn helped raise funding for over 60 different issuers globally, including FIG, SSA, and Corporates. Transactions on our platform were issued in 12 different currencies, and ranged in size from small $5mm private placements up to large, nearly $2bn benchmarks. And this doesn’t even include the +800 retail structured note trades we’ve processed across our structured notes module.
Solving the right problem
How did we do it?
We were the first organization to identify the most important problem facing the capital markets today: document automation and structured data.
No matter what your vision for the future looks like, you need to solve the structured data problem. Even if you believe in a capital markets that is built entirely on distributed ledger technology, and is powered by smart contracts and funded by CBDCs or stablecoins, you still need to draft legal docs that you can take to court, if necessary, and you still need to get the data out of those docs and into your smart contracts.
I recently spoke with one of the participants of a recent digital bond issuance, and they candidly admitted that the only way they were able to achieve T+0 issuance and settlement was by completing all the docs 2 days ahead of time.
The single biggest bottleneck between T and T+5 is documentation.
Our two key themes
We’ve been building our documentation automation product for over 6 years now. And we have created what we believe to be the most complete Documentation automation solution that the capital markets have ever seen. We’ve done that by focusing one two key objectives:
Creating a superior user experience for those creating the documents.
Building out the widest ecosystem of connectivity for downstream/post-trade integrations.
Let’s take those in turn:
And again, and again, and again…
How do you build a superior UX? How do you build a superior digital product? There’s only one way: feedback and iteration.
We started building Origin Documentation in 2017 when we built our first termsheet generator. In 2018 we extended the product to include support for final terms and other legal docs, and started doing our first client test transactions. In 2019, we completed our first live transaction across the tool. In 2020 we rebuilt the tool entirely from the ground up in response to the feedback we received from those test and live trades. In 2021 we finally launched the tool live to the market, and have since extended it to include support for structured notes, and syndicated transactions.
Importantly, in the 6+ years we’ve been working on this problem, we’ve completed over 1000 test and live transactions with real clients. And every single one of those transactions has given us valuable feedback which has allowed us to improve and refine the product.
The best products are built on the shoulders of a robust feedback loop of lots of client usage -> constructive feedback -> continuous improvement. We’re fortunate to have the largest client footprint in the market today, and that drives the excellence of our products.
Integrate to accumulate
Moving on to integrations. The structured data our tool produces is only valuable if you do something useful with it.
Origin has been building connections with the market infrastructure and post-trade community for over 3 years. We started by connecting with the Luxembourg Stock Exchange in 2020. Since then, we’ve added connectivity to the London Stock Exchange, some of the largest paying agents, including HSBC, Deutsche, and the Bank of New York, as well as Clearstream, including their legacy CSD Clearstream Bank in Luxembourg, as well as their new digital offering D7. We now also connect into clients internal booking systems, and are extending support to include connectivity into market data providers.
So now, when you draft a termsheet on Origin, with one click, you can generate an ISIN instantly, and with another click, you can create the security in market databases. Then, once the final terms are done, with one click you can digitally sign them, with another you can send them to your IPA, and with a third, you can list them on an exchange.
This is true “STP.”
The time is now
There’s no better way to illustrate the evolution of our platform, than to showcase the evolution of one of our favourite clients.
In 2020, Volvo joined the Origin Marketplace to better connect with their dealer counterparts. In 2021, they dipped their toes into our Documentation tool, issuing a €300mm private placement.
Earlier this year, they decided to step it up a notch, completing the first truly syndicated transaction on Origin, a €1bn 2 tranche benchmark deal, with 4 dealers, 2 law firms, and the issuer, all collaborating across our tool. That went well, so they followed that up with another 2 more trades, a €700m benchmark in August, and an SEK 8bn 4 tranche deal in October.
We’re proud that an issuer like Volvo has embraced our platform not just to complete one or two “POC” trades, but to execute multiple transactions across a variety of markets and formats, including some of the most complex.
So, when is technology going to finally transform the debt capital markets?
It already has.