Overbond, a Toronto-founded AI and FinTech startup, is partnering with business school HEC Montreal, Concordia University, and the Institute for Data Valorization (IVADO) to open a series of R&D labs.

“We are pleased that Overbond has chosen Montreal as the home base for this advanced financial AI initiative.”

The R&D Labs initiative will be part of the Fintech Station, an accelerator launched by Finance Montreal, and will also be part of the venture community hub, Espace CDPQ. Overbond stated that the R&D Labs will source one of the deepest vertical data stacks in the world for fixed income capital markets AI modelling, including traditional and alternative data sets.  

“Our R&D Labs will be offering to our clients a sandbox environment for rapid prototyping,” said Vuk Magdelinic, Overbond’s CEO. “We will be exposing all advanced models and AI capabilities to reduce development and research costs for our clients by at least 10 times.”

Overbond said the labs will be staffed with more than 30 master’s, doctoral, and post-doctoral fellows from HEC and Concordia University, focusing on advanced AI applications for bond price prediction, price momentum, liquidity scoring, fundamental analysis, and modelling the shape of yield curves.

The labs will also offer the sandbox environment for rapid prototyping as of September. Overbond plans to expose all its advanced models and AI capabilities, in hopes of reducing costs associated with R&D.

“It is very hard to apply AI modelling in the fixed income bond universe, as data is gappy and really patchy,” Stephen Miles, the public relations director of Overbond, told BetaKit. “Overbond[‘s] sandbox environment will make normalized, cleansed, and relevant data available so that AI model prototypes for clients can be built fast, and all the hypotheses can be tested fast. Traditionally AI companies usually engage in doing a proof of concept, but Overbond has changed that increasing speed and reducing costs … by opening all core models and data within the sandbox.”

The company said all advanced algorithmic output, such as bond price momentum recommendations, pre-trade ideas, pricing tension signals, and buyer preference monitoring, will be made available to Overbond’s clients through its cloud-based platform.

“Accurate prediction of bond prices with advanced AI is an important area of new research and applications in capital markets,” said Cody Hyndman, lead professor at Concordia University. “We are pleased to partner with Overbond to provide opportunities for master’s, doctoral, and post-doctoral fellows to be part of this exciting initiative.”

Founded in Toronto in 2015, Overbond seeks to transform how investment banks, institutional investors, corporations, and governments access the fixed income market through advanced AI analytics. In 2016, the company raised a $7.5 million seed round, before partnering with Thomson Reuters to integrate Reuters’ income market data and analytics. In June, the company launched a bond pricing algorithm that can price yield curves in all G10 currencies.

“[The] importance of the Montreal financial markets and AI communities … could not be underestimated when attracting cutting edge projects to Montreal,” said Pierre Fitzgibbon, minister of economy and innovation in Quebec. “We are pleased that Overbond has chosen Montreal as the home base for this advanced financial AI initiative that will eventually staff more than 30 Quebec researchers.”