Organically Expanding into Fixed-Income

At Clear Street, we’re pioneering a technology-first experience for prime brokerage on our modern, cloud-based platform. In 2019, we began servicing prime brokerage clients in U.S. equities and options on our proprietary clearing, settlement, and custody platform. Since then, we’ve added execution, securities lending, repo, margin financing, and more.

Our mission is to build modern infrastructure for capital markets, with the goal of creating one platform to serve all investor types across all asset classes globally. In keeping with that mission, we’re excited to share that we have expanded our asset class capabilities to include fixed-income securities.

Powered by cutting-edge technology

This expansion is possible because of our single-source-of-truth prime brokerage platform, which uses cloud-native, event-driven, and horizontally scalable technology. While it can take other prime brokers years to add new asset classes, we built fixed-income capabilities on our platform in just six months.

The complex legacy tech environments at other prime brokers often consist of a patchwork of systems that integrate poorly and require extensive reconciliations. In contrast, Clear Street’s platform acts as a cohesive whole, consisting of hundreds of microservices that can seamlessly communicate via a library of APIs (application programming interfaces).

Launching support for fixed-income in just six months required coordination across various business and technology teams. Nearly every engineering group - reference data, clearing and settlement, custody, risk, and securities finance - needed to add new capabilities while working in parallel.

For example, the risk engineering team was building models for convertible bond risk even before the reference data team finalized their data inputs for such bonds. This is possible because of our API-first approach. We don’t need to wait for teams to finalize their work and provide concrete implementations for all APIs to begin developing dependent components. We were confident that if we created durable API contracts, all the pieces would click into place, like a giant jigsaw puzzle.

The microservices-based architecture also helped us roll out a change of this magnitude. In the last month alone, we deployed well over 100 production releases to prepare for the launch.

The success of this project is a testament to both the deep expertise of our subject matter experts with decades of experience in financial services and the strength of our engineering teams.

Backed by a strong capital base

We’re now serving dedicated fixed-income clients and multi-strategy investment managers who trade corporate bonds, convertibles, and treasuries.

Our advantage goes beyond our technology. Bank regulators recently announced extensive regulatory proposals that would raise capital requirements by an aggregate 16 percent (i). Fixed-income securities, particularly convertible bonds, increase a bank’s risk-weighted assets (RWAs). As capital adequacy ratios increase, higher RWAs mean a lower return on equity for banks.

As an independent prime broker, Clear Street has more flexibility to take on clients left behind by legacy banks burdened by capital constraints. We have the flexibility to finance our clients’ strategies and grow their businesses with the support of more than $700 million in capital.

Growing our prime brokerage

While we continue to grow Clear Street’s services, we’re up against established players working with decades-old technology that struggles to keep up with the changing prime brokerage landscape. Earlier this year, we acquired BASIS, a cloud-native futures clearing platform, to accelerate our development in the futures space and further our plans to rapidly build support for more asset classes, geographies, and investor types.

Earlier this year, we announced the completion of the second tranche of our $435 million Series B capital raise, valuing Clear Street at $2.0 billion. This funding is helping us to expand our reach into new markets and asset classes, accelerate future product offerings, increase availability to all market participants, and bring us closer to offering solutions for clients looking to migrate to a single-source platform.

To learn more about Clear Street and our services, contact us.