How did KopenTech get started and what inspired its creation?
KopenTech was born out of my disappointment with the cumbersome and time-consuming process of refinancing CLOs. As a CLO equity investor, I saw the potential of this asset class but felt it was held back by inefficient process and the throughput required. Drawing on my background in credit derivatives, I set out to revolutionize the market by creating a multi-dealer online auction that would streamline the refinancing process and save time and money for investors. My goal was to help investors focus on portfolio management, rather than being bogged down by administrative tasks. I’m proud to say that our innovation has already been recognized as a credit positive by Moody’s, who estimated that equity investors could have saved tens of millions of dollars if all deals had gone through our auction platform.
Why is electronic trading important for CLOs?
Despite the CLO market surpassing $1 trillion, the trading practices in place are outdated and inefficient. Competitive trading is only possible through a time-consuming bid wanted in competition (BWIC) process that can take half a day to sell just a few bonds. Auction rules are not enforced or monitored, leading to one-sided price information that discourages bidders and doesn’t result in the best economic outcomes for sellers. That’s why I believe there’s a better way. By developing trading protocols that incentivize both buyers and sellers and are supported by technology, we can create a more liquid and well-functioning marketplace. Enforceable rules and live prices can provide clarity and certainty for bidders, leading to multiple rounds of improvements in CLO trading, similar to high-end art auctions. That’s why we developed the LiveBidding trading protocol and are committed to advancing the simplicity of structured products investing through technology.
What is your favorite product on the KTX platform and why?
While there are many impressive products on the KTX platform, my personal favorite is the Issuance Monitor. It may not be the flashiest tool, but it is incredibly useful for CLO managers and investors. In the past, asset management firms had to employ a full-time analyst to compile and clean primary issuance data for their investment teams. Now, the Issuance Monitor aggregates data from across the market at a fraction of the cost and time, making it an invaluable resource for anyone issuing a CLO or investing in a particular part of the capital structure. With robust filters and templates, users can easily access all the data they need and export the results to share with their investment committee. I believe that the Issuance Monitor is highly accretive to CLO primary investing and a good example of how technology can be used to simplify and improve structured products allocations.