Platform Profile: Tradeweb
Lee Olesky is CEO of Tradeweb.
1. Assess the state of your corporate bond trading platform – what were the primary milestones/accomplishments over the past year?
We’ve seen significant growth of trading volumes since the launch in our U.S. credit platform in 2014. Last year, more than $13 billion was executed on Tradeweb, with an average trade size of ~$2 million. We’ve also on-boarded more than 300 institutional clients who have access to liquidity from over 130 active dealers. Our recent acquisition of CodeStreet will also enable Tradeweb to incorporate new technology and analytics to complement our flexible execution protocols, which will further enhance our offering with better sourcing of liquidity, greater price transparency and efficiency.
2. What end-user/buy-side challenges are you addressing, and how?
We’re focused on workflow innovation, and the introduction of electronic Treasury Spotting has helped optimize the credit trading process. Our clients have access to the robust Tradeweb Treasury composite when hedging their corporate bond trades, which helps alleviate some of the challenges around quality of pricing, the time necessary to execute the hedge by phone and potential reporting issues.
Additionally, we believe that better pre-trade information and analytics will help investors find the liquidity they need in the credit markets. Tradeweb already provides clients with access to extensive pre-trade data including aggregated inventory, streams, runs & axes, and historical trade inquiries. We’re enhancing our workflow management solutions and trade identification tools for the buy-side following the CodeStreet acquisition, which will allow investors to gain access to better analytics that help determine the best counterparties to request prices from, and secure competitive pricing on certain trades.
3. What are your key current initiatives?
We are looking at different ways to support the roughly three different segments of the credit markets. The first is the odd-lot space (<$2MM), where there’s more significant penetration of list and blast RFQ trading, and where we have a great offering at a compelling cost. We’re providing efficiency tools in this space to support better execution and processing, but believe there is an even greater opportunity for electronic trading with larger size transactions in credit.
For round-lot trades ($2MM – $5MM), blast RFQs to the universe of liquidity providers hasn’t proven very useful, but more selective RFQ functionality could work well here with the right pre-trade information. We’re making progress in this segment of the market by delivering greater pre-trade intelligence to better inform targeted execution on these larger trades and help prevent information leakage. But it’s also about the entire lifecycle of the trade, so we introduced automated Treasury spotting onto the platform to streamline post-trade processing for many market participants – which has also proven popular for block trades being processed on the platform, the third segment of trading activity we’re focused on.
Overall, flexibility is key when it comes to execution across the liquidity spectrum in credit. We’ve given investors choice in the way they can execute their strategy, and now we’re focused on enhancing that entire experience pre- and post-trade to better navigate and improve access to liquidity.
4. How would you characterize the future of the corporate bond trading platform business (broadly), and your business specifically?
The adoption of e-trading in credit will increase as electronic platforms make it possible for market participants to trade more actively in credit markets. Different segments of the investment grade marketplace require different execution methods to meet their trading needs, which is a focus of ours in further electronifying the cash credit market. Functionality that improves overall workflow for clients, and increases efficiency on both the buy- and sell-side will play a significant role in navigating networks of liquidity and how they interact.
Featured image by Toh Kheng Ho/PhotoSpin
Aim is to optimize trades of more than 10,000 shares.
In an electronic market, personal relationships still matter.
Traders' ask of messaging-system providers: turn down the noise, please.
Majority of managers say off-the-rack options don't cut the mustard.
Buy side needs an integrated solution for multi-asset trading, Aite Group writes.