As chair of JPMorgan Chase’s liquidity risk committee, Glenn Havlicek was responsible for managing the bank’s global liquidity. While he managed a great deal of investment risk, his core mandate was to make sure the firm was fully funded every day. With that in mind, his homeward commute was often delayed by manual trade booking errors across a fragmented array of money market instruments, which created large swings in the bank’s cash balances. Over the course of his 22 years at JPMorgan Chase, Glenn always thought that there had to be a better way to prosecute the funding business.
In April 2010, Glenn put thought into action. He was determined to find a solution for the inefficient processes which caused so many late nights at JPMorgan Chase. With the thought that technology was the key to the realisation of his idea, he made his way to Palo Alto, in the heart of Silicon Valley, and co-founded GLMX. He started by partnering with one of the venture capital world’s most successful and experienced firms, Sutter Hill Ventures, then hired seasoned Silicon Valley engineers to grow the team. With his new team, Glenn set out to build technology that would make negotiating, trading and reporting money market instruments more efficient—with the ultimate objective of finding a cure for the operational pain points he had encountered throughout his career.
Íø±¬³Ô¹Ï Lending Times sits down with Glenn to lay out how, after almost a decade, GLMX is emerging as a leading fintech company in securities finance.
Can you explain some of the changes that GLMX is driving in the repo market?
GLMX was created not to change what is being done in the funding markets but rather how it is being done. We needed to build not just a trading venue, but a technology-aided liquidity ecosystem. At the end of the day, GLMX is not just about technology. It is about enhancing access to liquidity through technology. In the process of gaining understanding of the experiences of the world’s asset managers, banks, broker-dealers and hedge funds—big and small—GLMX identified a glaring and immediately addressable need in the repo and securities financing markets. These behemoth markets are, as one of our current clients coined it, “vastly underserved by technology,’’ which provides the perfect environment for the combination of GLMX market knowledge and technology.
Repo and securities financing markets are unique in that the multi-step and multi-variable nature of negotiation combined with the administrative pain of ongoing trade maintenance create operational inefficiencies for desks struggling to do more with fewer resources. The goal—and I think we’ve been very successful in this—is to replicate, electronically, the complex communication that goes on among clients, their dealers, their internal colleagues and their external partners. All with the aim of maximising efficiency and reducing operational risk wherever possible. Making an easy-to-use interface for our clients’ request for quotation (RFQ) flows results in easier access to liquidity, which is the ultimate objective.
Each account requires a consistent and simple interface for their liquidity pool that accurately reflects the different stages of negotiation. We set out to create a platform to streamline the RFQ-driven flow market participants used each day rather than acting as another communication tool, or on the extreme, attempting to change day-to-day behaviour.
What separates GLMX from other trading platforms?
That’s easy: GLMX is purpose-built for the unique, idiosyncratic needs of the repo market. Rather than being a bolt-on to systems developed to buy and sell securities, which is a much simpler flow than repo, it is a ground-up repo technology. In fact, we re-built the entire system from the bottom up in 2018, just to maintain our development flexibility advantage. From super-efficient pre-trade locates to price discovery and comparison to negotiation across dozens of variables to structured trades like term callables to straight-through processing to mid-life re-size, re-rate, substitution capability to data analysis to regulatory reporting, GLMX technology is about repo.
As a company, GLMX’s team has diverse yet complementary experience across trading, technology development and system integration. Our combined experiences range from funding management at places like BNP Paribas, J.P. Morgan and Bank of America to technology development and integration at places like Google and ION Trading. GLMX is focused on delivering meaningful change to the securities finance market and having the people to deliver solutions for our clients.
The GLMX technology team delivers prompt, specific solutions to our clients’ efficiency—browser graphical user interface, application programming interface or hybrid—are intuitive, easy-to-use and allow our clients to process large amounts of information, and display and mine that information in order to maximise their trading efficiency.
Finally, GLMX is an independent entity, funded by private equity investors who have supported us since the beginning and continue to be extremely enthusiastic about GLMX’s long-term prospects. This structure provides us with the support to be laser-focused on building advanced technology which provides our clients—equally buy side and sell side—with the tools, unavailable elsewhere, to heighten their trading efficiency and maximise their access to mission-critical liquidity.
What was the turning point for the market?
It would be an understatement to say that, beyond a very small number of genuine early adopters, the notion to dealer-to-client electronic repo elicited yawns and rolled eyes prior to GLMX’s launch into the repo space in early 2016. Since then, there have been numerous powerful influences underlying the now powerful surge into repo trading technology. While it’s hard to say whether any one of them alone turned the tide, I would point to the rise of repo in an era of expanding US budget deficits, to the need for both the buy and sell sides to expand their liquidity-seeking efficiency after 10 years of enormous excess system liquidity. I would also highlight the increased reporting demands of efforts like the Íø±¬³Ô¹Ï Financing Transactions Regulation (SFTR), and, of course, the availability of the kind of technology GLMX provides, which embraces repo with all its complexities, rather than as an afterthought. In any case, all of these contributing created a wave of adoption, which we believe makes today the turning point; and there is much more to come.
What is next for GLMX?
GLMX has a very clear and executable path to success. And, while we have medium-term ambitions to bring our technology to the broader, global money market ecosystem, our current focus remains squarely on repo and securities financing.
One of our ongoing, repo-specific and high-priority efforts is with respect to SFTR. A solution to the regulation’s reporting requirements is an urgent need for many of our clients who do business in European markets. Additionally, it plays directly to GLMX’s strengths. Beyond simple features like unique trade identifier generation, trade time-stamps and initial trade details, we provide full lifecycle reporting capabilities and can deliver that information directly to authorised trade repositories or to our clients in order for them to collate that data for onward delivery to trade repositories. GLMX’s capabilities with SFTR bring game-changing efficiencies to our clients’ workflows.
Finally, we strongly believe that GLMX technology is applicable to an array of pressing market needs and are enthusiastic about building even more, valuable functionality for our clients.
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