MOVES-OpenDoor hires Treasury veteran ahead of platform launch

LONDON, Sept 15 (IFR) - OpenDoor Securities, a start-up platform for off-the-run Treasury and TIPS notes, has hired Michael Paulus as a senior managing director ahead of the platform’s launch later this year.

Paulus brings 34 years of Treasury experience, having held positions in the US Treasury and the Federal Reserve Bank of New York and more recently a series of posts in global banks.

The platform provider, which recently closed a US$10m funding round, aims to address the severe dearth of liquidity in off-the-run Treasury notes. The latest hire comes as the firm prepares to test its technology with a growing list of clients.

According to OpenDoor CEO, Susan Estes, launch is slated for later this year, though the firm could extend that timeline to avoid going live during the quiet holiday season.

“The technology piece is nearly complete. We will begin our beta testing in the form of mock auctions in the coming weeks” Estes told IFR.

“Presently we have docs in place with a number of sponsor-dealers, central banks, investment funds, pension funds and mutual funds, with many more in the queue. Our focus is on achieving critical mass at launch.”


Liquidity in off-the-run-Treasuries has been decimated by Basel III capital rules that have caused banks to step back from market making activities as well as monetary easing measures that have seen central banks lock up vast quantities of high-rated government debt.

The Federal Reserve is currently sitting on US$2.4trn of Treasury securities - more than 18% of total outstanding. In some off-the-run securities, that is as high as 70%, effectively shutting down opportunities in some parts of the curve.

“OpenDoor has been designed to help restore liquidity to off-the-run Treasuries and TIPS. We see ourselves as part of a broader solution,” said Estes. “Our trading protocols encourage larger block trading, which is nearly impossible to execute reasonably within today’s existing market structure.”

According to Estes, the problem has become more acute in the last two years. Off-the-run securities currently account for just 31% of Treasury trading compared to 40% two years ago.

“The loss of liquidity in off-the-runs, which represents 98% of outstanding notional issuance, is being played out in wider bid-offer spreads and increased execution costs for institutional investors which are then down-streamed to the individual,” said Estes.

“When a large mutual fund or pension fund incurs higher execution costs, it is the individual investor or retiree that ultimately pays the price in lower returns.”

The new venue offers session-based all-to-all trading that sees dealers sponsor clients onto the platform, where they can trade anonymously.


In his new role, Paulus will be responsible for strengthening relationships with central banks and expanding the platform’s reach to new participants.

Although focusing on public and private sector clients globally, he will have a particular focus on Asia. Paulus will also work with regulatory institutions globally to discuss liquidity challenges in the Treasury market and He will report directly to Rob Grillo, president of OpenDoor Securities.

Paulus was most recently head of public sector for JP Morgan in Hong Kong where he was responsible for creating the bank’s public sector group across the Asia Pacific region. Prior to that he held positions at HSBC and Citigroup.

In 2000 he was appointed by President Clinton as the deputy assistant secretary for federal finance at the US Treasury Department. His responsibilities included managing the debt of the US government as well as advising senior members of the administration, and Treasury officials, on financial market developments.

He began his career at the New York Fed as an economist and subsequently became chief dealer of the foreign exchange desk.

“The US Treasury market faces some of the largest pain points of any sector in finance right now, and OpenDoor has developed a solution that will adequately tackle these issues and balance a market that has been bifurcated for years. I am very excited to join Susan and the strong team she has already put together,” said Paulus, in a statement.

OpenDoor has also hired Matt Corsaro as a director of sales. Corsaro joins from Tradeweb, where he managed MBS and US Treasury relationships. He also held trading roles at Bear Stearns and Prudential.

Kam Hing Wong has been appointed as vice president for STP & trade support. Most recently he supported Deutsche Bank’s future & option FIX execution offering, where he was responsible for client connectivity, support and certification, and system integration. (Reporting by Helen Bartholomew)