Start-up bond trading platform LedgerEdge has closed three years after its establishment due to “an extremely challenging funding environment”, the organisation has confirmed.
The business was launched by industry veteran and founder of blockchain consortium R3, David Rutter, in a bid to digitise the traditional corporate bond market. The firm focused on expanding the reach of electronic trading and providing market participants an alternative model.
LedgerEdge enjoyed many successes during its run and a high degree of market support – notably from buy-side players. However, market conditions and prolonged timeframes proved too much for LedgerEdge to sustain.
“An extremely challenging funding environment was not conducive to extending the runway for the business, despite improved traction in 2023 and strong client support,” said LedgerEdge when approached by The TRADE.
“LedgerEdge was a well-conceived model with huge potential and support to solve the challenges of finding and promoting corporate bond liquidity. As is the case with new technology and protocols, there are many barriers to entry and success, especially when it comes to onboarding and adoption. This is particularly true of the corporate bond market which is traditional and used to legacy protocols, operations and ingrained technology.”
The concept of LedgerEdge was based on the use of distributed ledger technology (DLT), blockchain technology, artificial intelligence, and secure enclave computing to help traders seek liquidity on the platform, find and share data, and execute trades in one ecosystem.
Its aim was to bring the latest technologies to institutional-grade trading services and protocols in the corporate bond market.
“Even when you have brilliant customer support, in particular from the buy-side, and transformative, efficient new protocols, translating that to live and active customers can take many years. Building a new model through a cost-constrained environment through Covid has proven particularly challenging,” said the business.
In June, LedgerEdge appointed Stefano Dallavalle is its new product director and Diederik Van Suchtelen as head of its Amsterdam office and EU sales as it looked to establish an EU multilateral trading facility (MTF) license in the Netherlands, following its UK MTF authorisation last year.
The developments followed LedgerEdge’s US subsidiary, LedgerEdge Securities, being granted approval to operate as a broker-dealer and an alternative trading system (ATS) by the Financial Industry Regulatory Authority (FINRA) in late 2022. More recently it gained the same approvals from the Securities and Exchange Commission (SEC) in February of this year.
Concluding its statement, the business highlighted its frustration with the circumstances which lead to its close: “We want to thank all of the institutions and individuals for the energy and support they provided to the concept and development of this model. We share their frustration and disappointment that together we were unable to deliver an exciting new market structure that would have enhanced the corporate bond market for all participants.
“This is a market which has considerable inefficiencies and challenges. It should and will change through technology in the future.”