Greco, who had worked at investment bank Jefferies and automated trading firm Getco, wanted to forge a different path. He said constraints on Wall Street dealers after the financial crisis created an opportunity for a trading platform available to investors and trading firms. If successful, it would erode the barrier between the newer, technologically sophisticated trading firms and investors, though likely to the detriment of the banks.

For his vision to work, he needed a way to clear and settle trades. That’s a key back-office function that provides a buffer between traders should one of them default. That system also handles the exchange of cash and securities. That plumbing resides inside Depository Trust & Clearing Corp. at a unit called the Fixed Income Clearing Corp. FICC, as it’s known, is the only clearinghouse for government bonds.

To join FICC, a startup like Direct Match faces insurmountable odds: a significant amount of capital and six months’ experience running a profitable business among a host of other rules maintained by DTCC. That’s why it had to partner with a bank, which would serve as a conduit into the system. Direct Match had a deal with State Street until the bank canceled it earlier this year.

Among the nearly 150 banks and brokers that make up the FICC, only three are willing to grant access to the clearinghouse for outside firms like Jump Trading or Direct Match, according to people familiar with the matter.

Tumultuous Period

The Treasury market has been through a period of controversy and tumult in recent years, including allegations of manipulation. Last year, people familiar with the matter said the U.S. Justice Department was investigating whether information was being improperly shared by financial institutions that serve as the market’s backbone. In October 2014, the biggest yield swings in a quarter century undermined investor confidence.

Regulators have taken notice. The Treasury Department, Securities and Exchange Commission and other U.S. government agencies are in the middle of assessing how the market should be overhauled to accommodate modern trading. That’s the first government review since 1998. The SEC is separately considering a requirement that Treasury trades be reported to the regulators at the end of the day.

To read more about the attempt to reshape the Treasury market, click here.

DTCC also runs the clearinghouse for U.S. stocks. IEX only needed regulatory approval, not a bank gatekeeper, to get its exchange going, a sign the barriers to entry into the $24 trillion U.S. stock market are far lower.

DTCC declined to comment on Direct Match.