Over the past four decades, capital markets have experienced significant transformations as technology modernized many asset classes. However, some sectors, like syndicated loans and collateralized loan obligations (CLOs), have remained resistant to these changes. The leveraged loan market has traditionally operated in a more analog manner, relying on emails, Bloomberg terminals, and phone calls for trades. Despite its substantial size, innovation within this market has lagged behind other asset classes.
This scenario is reminiscent of earlier shifts in equities and fixed income markets during the 1980s and 1990s when electronic trading platforms began to reshape Wall Street's landscape. Currently, over 90% of equities are traded electronically, demonstrating how technology can transform even the most entrenched markets.
Octaura emerged in 2023 as a centralized marketplace designed to streamline the trading of syndicated loans and CLOs with real-time data and standardized workflows. In just two years since its inception, Octaura has captured 4.6% of total market volume with over 140 buyside firms and 25 sellside dealers participating.
An investment in Octaura was announced by new investors Barclays, Deutsche Bank, BNP Paribas, Apollo Global Management Inc., Motive Partners MassMutual Ventures along with existing investors such as Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Morgan Stanley Wells Fargo & Co., Moody’s Corporation.
The investment is driven by several factors:
1. Network Effects: Success for trading platforms depends heavily on adoption from both sides of the market.
2. Backing from Major Players: Octaura's bank origins provide access to influential industry dynamics.
3. Rapid Market Penetration: Achieving a significant market share swiftly highlights demand for improved solutions.
4. Long-term Vision: Octaura aims to leverage its data capabilities beyond trading into broader analytics offerings.
5. Strong Leadership Team: Led by CEO Brian Bejile who assembled an experienced team capable of building major financial infrastructure platforms.
These elements suggest that startups like Octaura could become industry leaders amid opportunities for change within alternative assets classes.