Seattle-based BondHub Inc., an online trading platform, is expanding its sales and product lines as it moves into its second full year of operations, chief executive officer and founder Tom Evankovich said last week.
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The firm decided to expand now because it was able to raise $2.3 million in a preferred stock financing in July, vice president of technology Jeff Thiel said yesterday.
He added that the move to add salespeople was not only driven by the record volume posted in the municipal market, but because of the growth stemming from more online activity in all of the different sectors. The larger institutions have grown comfortable with online trading and that has led to more transactions, Thiel said.
The firm is hiring institutional and fixed-income sales representatives for its Seattle and Coeur d'Alene, Idaho, offices. It is also looking to hire sales and business development persons with the appropriate licenses, such as Series 24, to establish new offices in areas that may include New York, Chicago, and Boston.
BondHub will hire salespeople with an existing book of business to develop the new offices. The business development officials would assume the titles of vice president and target investment advisory prospects, according to Evankovich. BondHub has opted to target investment advisers with less than $500 million under management, trust departments, banks, smaller broker-dealers, and independent broker-dealers, he said.
Thiel, however, said that BondHub is not restricted to working with such clients, and currently has a few clients that have over $500 million under management.
BondHub now trades corporate, municipal, and government agency debt, as well as certificates of deposit. Presently it does not trade mortgage-backed bonds on the online platform, but expects to do that towards the end of the year.
Sang Lee, analyst at Celent Communications, said in an interview yesterday that "BondHub has always gone after smaller firms and independent financial advisers -- a market neglected by the larger bond dealers. As a result, it has avoided competition with the larger dealers and has been able to find a niche market" in this area.
"There are always opportunities in that market, but the question is, 'How much opportunity exists?' " Lee added.
BondHub's ability to raise money in this type of market is very commendable, he said. The company's niche market seems to have kept the company afloat.
At the end of 2002, there were 52 online trading platforms based in the U.S., down from 70 in 2000. Survivors include the MuniCenter, TradeWeb, BondWave, and i-Deal, a Thomson Financial spin-off that operates a platform called Parity. Walnut Creek, Calif.-based eBondTrade, which was owned in part by J.P. Morgan, ceased operations in mid-November.
In the past month, BondHub has hired one institutional salesperson, one trader, one business development officer, and two software engineers.
BondHub provides a fixed-income order-execution solution to independent financial advisers and investment officers at institutions. It also offers free access to online descriptive and analytical information on bond issues and listings of corporate, municipal, and mortgage-backed bonds that can be traded electronically. Customers pay a fee only after they complete a trade.
