Tinder for CDS?

11/04/16

Dealers occupy an important position in financial markets, essentially serving as central nodes that match buyers and sellers of all types of instruments.  Sometimes the dealer itself will serve as the ultimate buyer or seller, but frequently they are running (or attempting to run) matched books of buyers and sellers.  In short, dealers are really just matchmakers.  So here's the thing:  we've seen how human matchmaking can be entirely replaced by (1) algorithms and (2) apps.  For algorithms, that's just stuff like Match.com or eHarmony.  And for apps, well, there's Tinder, etc.  I assume that someone has even combined algorithms with an app, so users don't have to browse for dates, but just log on and are automatically matched.  This model seems entirely applicable to many types of financial contracts.  If I'm a hedge fund looking to go short on some debt obligation, I need to find someone who will sell me CDS.  I could go to a dealer (and pay a nice bit for this), but why not just use an app that will match me with all of the funds that are looking to go long?  We could have Tinder for CDS--let's call it CinDerS.  If there are apps that can match dominants and submissives, why not protection buyers and protection sellers?  And nothing limits this to CDS.  It really works for any type of financial instrument.  I'm sure there are a bunch of regulatory and business issues lurking here, but it strikes me that the old dealer model is facing an imminent technological challenge.  

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