Buy-side trading system of the year: Tradeweb

Asia Risk Technology Awards 2020

When it comes to trading in the capital markets, sourcing for liquidity remains one of the highest priorities.

Tradeweb helps asset managers, central banks and other institutional investors access the liquidity they need through a broad range of fixed income, derivatives and equities. Its electronic platform connects buyers and sellers of financial instruments and helps its clients find the best price and execution method for their transactions.

It works directly with liquidity takers and liquidity providers to create transparent and efficient ways to trade and provide solutions across the trade life cycle, including pre-trade, execution, post-trade and data.

In the past 20 years, Tradeweb has built a global business providing efficient and transparent access to liquidity across more than 40 products. It serves more than 2,500 institutional, wholesale and retail firms across more than 65 countries.

Its marketplaces facilitate trading across 24 currencies and asset classes, including rates, credit, money markets and equities. On average, Tradeweb facilitated more than $790 billion in notional value traded per day over the past four fiscal quarters, with real-time pre-trade pricing from over 50 leading liquidity providers.

Since launching its Automated Intelligent Execution (AiEX) tool in Asia in September 2018, institutional trading desks within the region use the tool to increase speed to market and reduce costs and operational risks.

The tool also enhances trading efficiency and capacity to focus on larger-sized transactions, essentially helping to unlock liquidity through more intelligent trading. AiEX allows traders to control all aspects of trading by automating how orders are submitted to the market and defining rules for accepting and rejecting trades. Asian trading desks, particularly when trading in large size, want to have flexibility over trade timing.

Tradeweb has a time-release feature that helps clients pre-plan and set up trade execution timing ahead of busy periods or non-local trading hours. This feature allows traders to shift their focus to other priorities.

Li Renn Tsai, Tradeweb

Li Renn Tsai, managing director and head of Asia at Tradeweb, says looking ahead, Tradeweb will continue to enhance client workflows. This is possible due to Tradeweb’s scale and breadth across asset classes, products and regions. It also collaborates with customers to build smarter trading technologies.

“For example, we constantly look at new ways to use our extensive and robust market data to better inform price discovery and order execution. Pre- and post-trade intelligence is key, particularly in this new work-from-home environment. Data is also crucial in supporting clients’ automation decisions via our AiEX tool, ultimately helping them achieve their trading objectives in different market conditions,” he says.

Traders can also quantify transaction costs using the Tradeweb proprietary transaction cost-analysis tool. Feedback from this same application can be used to iterate and refine execution rules following clients’ own best-execution policies. For example, in Japan buy-side dealing desks often have to physically document their adherence to best execution on a post-trade basis. If trades are executed via Tradeweb AiEX, this is no longer necessary, as compliance with local execution rules and regulations can be built into the automated process.

Tradeweb also operates an Asia-listed exchange-traded funds (ETF) marketplace, which replicates its request-for-quote (RFQ) trading model from Europe and the US. The Asia ETF platform is a natural extension for the growing ETF business at Tradeweb. It allows investors in all regions to tap into the main ETF markets in Asia, such as Hong Kong, Singapore, Taiwan and Tokyo.

Tradeweb was the first offshore platform to link with the Bond Connect programme, providing foreign investors access to China’s mainland fixed-income market. It recently launched a new electronic mechanism on the China Interbank Bond Market (CIBM Direct) – another access channel into China’s bond market – to allow foreign institutional investors to use the disclosed RFQ system.

As a result, it now provides fully electronic access to the two most popular northbound entry channels into China.

For the Bond Connect programme, Tradeweb has now increased the number of allocating sub-accounts from 30 to 50, to facilitate more foreign investor participation. This allows investors to trade up to 50 sub-accounts without having to split the order up, thereby increasing efficiency and saving execution time.

During the 12 months ending May 2020, the average daily trading volume in CNY cash bonds grew by 37% from the previous year.

An area of growth for Tradeweb is in emerging markets interest rate swaps. It currently covers 12 markets, including five in Asia. Tradeweb recently added an Australian exchange for physical (EFP) to its product suite in response to client demand.

It is also making trading workflows more flexible by developing new or expanding existing protocols, such as request-for-market. “Not having to show the direction they want to trade has really resonated with clients, who may be concerned about information leakage,” Tsai adds. 

Asia Risk judges agree that Tradeweb’s trading system is successful and is the most well-developed solution compared to the other submissions. One judge says: “I like AiEX, and the Asia-listed ETF market place. Also, Tradeweb’s Bond Connect initiative is great.”

Another judge adds that Tradeweb’s product is well established, and is highly utilised with market-leading transaction flows.