The electronification of primary bond markets is a priority for buy-side firms this year, and DirectBooks, originally formed by a consortium of nine global banks is delivering on its promise to evolve this market.
With 31% of overall respondents – and 62% of respondents headquartered in the US – currently using the platform, it is neck-and-neck with its nearest rival on a global basis and leading the market in North America.
“The first driver for our growth has been action over words,” says CEO, Rich Kerschner. “We’re at the beginning of our journey. We faced a lot of early scepticism, though we knew we would win loyalty with our actions, not our words. We have a maniacal focus on the entire client experience.”
This can-do attitude extends to delivering on its goals, appreciating and working closely with users to tackle the many complexities of the primary market workflow.
“One of our mantras is, ‘It might not be our fault, but it is our responsibility’,” Kerschner says. “If a bank or buy-side firm has an issue, we get into it with them, and try to help them fix it. The next is intellectual honesty. When we don’t know something, we tell clients that we don’t know it. If we’re not sure we’re going to be able to do something, we tell them that. It doesn’t always make for happy clients in the beginning. But we’ve established our credibility.
“Combined, those aspects drive us forward, and we’re playing the long game. We’re building a complex system. Every six months, it is a better system. We’ve been honest about how we prioritise, and why. I think the greatest feedback point that we’re most proud of, particularly in Europe, is that users who were sceptical in the beginning see that we’ve done what we said we were going to do.”
That is apparent in the pipeline of new business that the firm sees – 29% of all respondents report they are planning to use DirectBooks, and 90% of those new users are with firms headquartered in the EMEA region, showing a massive swing in geographical coverage.
The firm says its capacity to turn a pipeline into users will come down to its problem-solving capabilities, which reduce the burden for onboarding clients.
“We have scaled our client service capabilities to handle far beyond our current 550 investor accounts, with the same or better focus than we had when there were eight big accounts when we launched,” Kerschner says. “Understanding the full range of buy-side pain points is our real secret sauce. Smaller investor firms will have different issues than the large buy-side firms, but not always in predictable ways. Getting the right diversity of expertise on our team to manage that full range of client pain points has been very intentional.”
While a record level of bond issuance across markets has helped the tide float all boats in 2024, Kerschner says his team is working hard to remain an intrinsic part of the primary market workflow for users – and half of the US-based users surveyed reported being ‘major users’ of the system, a good indicator of embeddedness – and there are a still a lot of battles to be won.
“We’ve set a record for all of our key metrics in the first quarter,” he notes. “Which also reflects the recent growth in market activity. With this in mind, we are also busy on several new growth initiatives which will result in DirectBooks 2.0, our next evolutionary stage.”
www.directbooks.com
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