The next article in our “Simplex Ventures Founders Series” features Spline Data – a quantitative U.S. municipal bond data provider. Combining traditional trading intuition and bleeding edge machine learning, Spline’s products allow customers to compete at the top of their game.
A Q&A with Spline Data’s Founder, Matthew Smith
Welcome, Matthew! Can you kick us off by giving a quick introduction of yourself and Spline Data?
Hi there! My name is Matthew Smith, founder of Spline Data. I previously traded municipal and corporate bonds at Headlands Tech Global Markets, which was acquired by TD Securities in 2021. At the time, the desk was one of the first and largest algo liquidity providers in the muni space. I left TD in 2022 to pursue a lifelong dream of entrepreneurship and started Spline Data with the goal of solving the frustrations that my constituents and I had with readily available data in the muni market. From the very beginning we set out to build fully automated, real-time, algo-quality muni pricing and yield curves which we have since released and continue to improve.
As a municipal bond data provider, what problem is Spline built to solve?
Spline is purpose-built to address the problem of accurately valuing municipal bonds. Municipal bonds are very unique in the sheer number of different securities that exist and the market’s overall structure. There are more than one million active CUSIPs, all with different credits and features, none of which can be sold short. This combination of characteristics has historically led to mile-wide bid/ask spreads and volatile liquidity. Recent advances in machine learning and changing attitudes towards tech in this space have allowed us to build a scalable pricing solution for munis and other esoteric asset classes to come.
Take us back to 2022. What inspired you to start Spline?
My inspiration comes from direct experience with the problem at hand. In my trading days, I would often spend inordinate amounts of time trying to interpret and correct the market data I was seeing at the time rather than thinking up new signals and strategies. Particularly in 2020, it was evident that the lack of real-time, quantitative pricing data was very negatively affecting liquidity and execution within the market.
With Spline’s precise data and pricing software, how can customers innovate their trading strategies?
We think about our value proposition through three lenses: execution, automation, and optimization. First and foremost, our pricing model and yield curves help users more accurately evaluate bids and offers on both the buy side and the sell side. Our pricing feed is designed to be tradeable right out of the box, entirely on its own or in conjunction with other data providers. In fact, we welcome users with no previous automated trading experience to try out our product. That being said, when it comes to more technologically advanced participants, our users have found large improvements in both portfolio optimization and strategy optimization by combining our pricing model with their own, whether it be in the form of signals, relative value, or even simple guardrails.
What are some other key features that Spline offers professional and institutional traders as they look to adopt the platform?
We go to great extent to make our data available and usable to every type of user. Our primary feature is that we price munis by size, rather than just pricing round lots. One of the more prominent quirks of the muni market is how distinctly cheap odd lots trade relative to a round lot in the same CUSIP. All the data we sell is accessible and easy to visualize through our web-based user interface. We also deliver our data through REST, SFTP, and FIX with the goal of reducing barriers to consumption. Lastly, we make our data very easy to try out. Currently, people can test out our pricing model and curves without even needing a login.
Are there any recent success stories you can share with us?
While we have a few to choose from, we are hyper vigilant of our customers’ privacy since we operate in the extremely competitive space of electronic trading. I can point you to a recent press release we did with FMSbonds where Chad Wildman has built an incredible muni algo with the help of our data.
As Spline’s success continues, what are some areas where you see the company growing?
An obvious next step for us is in the primary market for muni bonds. Too often, there is a dearth of information about what an issuer’s bonds may be worth and we are extremely well-positioned to address that inefficiency. As far as the team’s affinity for obscure fixed income products goes, we certainly foresee using our models for other asset classes in the near future.
Where can people find Spline to learn more?
The easiest way to find out about our products is by visiting our website (https://splinedata.com/) where you can visualize and test the data without even having to log in. You can also contact us directly via info@splinedata.com or by using the contact form on our website.