Buy-side trading system of the year: Tradeweb

Asia Risk Awards 2021

Technology is a key foundation of Tradeweb’s business. Its continued technology investments have enabled it to develop new and creative solutions that maximise access to liquidity for market participants. Over the past five years, Tradeweb has invested over $318 million in technology.

Tradeweb serves more than 2,500 clients covering the world’s largest banks, asset managers, hedge funds, insurance companies, wealth managers and retail clients.

Clients have access to over 40 product offerings in rates, credit, money markets and equities, in more than 65 countries across the globe. Tradeweb supports clients with solutions across the trade lifecycle, including pre-trade, execution, post-trade and data.

James Sun, head of Asia at Tradeweb, says the pandemic and shift to working-from-home practices accelerated the adoption of tech-driven trading solutions. For this reason, any new enhancements to the platform need to be robust enough to tackle market volatility and unprecedented levels of bond issuance, as well as changing working practices.

Over the past four quarters, Tradeweb facilitated more than $920 billion in notional value traded per day, with over 150 dealers providing liquidity to its global institutional clients. In the first three months of 2021, the firm saw average daily volume surpass $1 trillion.

Tradeweb recorded its 21st consecutive year of record revenues in 2020. Gross revenue increased 15.1%, to $892.7 million, compared with full-year 2019, driven by record volumes across all its asset classes, and capped off by a record fourth quarter. Net income increased 26.2% to $218.4 million in 2020, compared with $173.0 million in the previous year.

Sun says one overriding theme Tradeweb will focus on is reducing fragmentation by creating a uniform experience, providing access to the same functionality across markets. This is a relevant theme, particularly in Asia, which consists of many markets with their own regulatory framework and trading practices.

“The standout example is China, which is making significant progress in integrating its markets into the international financial system. We will therefore continue to invest in technology ensuring that traders in an increasingly global marketplace – regardless [of] their location – are able to fully realise opportunities in a way that combines efficiency, access to liquidity and seamless functionality across markets,” he says.

During the 12 months ending June 2021, the average daily trading volume in CNY cash bonds on Tradeweb increased by 47% year on year.

In the last year, Tradeweb made enhancements to its China bond trading links. It was the first venue to offer foreign global investors fully electronic request-for-quote trading on the China Interbank Bond Market (CIBM Direct) channel.

On Bond Connect, it nearly doubled the number of subaccounts to 99, which means that investors can now trade up to 99 subaccounts without having to split up the order, increasing efficiency and saving execution time.

Our main goal is to build a strong pipeline of trading protocols and workflow enhancements so we can help our clients deepen their participation in the onshore markets

James Sun, Tradeweb

Tradeweb also expanded support for trading of Chinese onshore bonds, following a decision by the China Foreign Exchange Trading System, China Central Depository & Clearing, and Shanghai Clearing House to extend the settlement cycle from three days after the point of transaction (T+3) to four days afterwards (T+4).

China remains an exciting market for Tradeweb and for many international investors, as well, says Sun.

“Our main goal is to build a strong pipeline of trading protocols and workflow enhancements so we can help our clients deepen their participation in the onshore markets,” he adds.

An Asia Risk judge says Tradeweb’s focus is extensive on Asia, as well as on its product innovation, especially in the Chinese bond market.

Looking ahead, Tradeweb will continue its focus on automation. The firm’s team of technology professionals worked with users of Automated Intelligent Execution (AiEX) – its key automation product – to develop parameters tailored to the volatile market conditions, where execution desks were dealing with reduced screen space and increased ticket counts.

“We fully expect traders to realise the benefits of automation – namely, handling routine trades, allowing them to focus on the trades that matter most. They can better generate alpha, make more effective use of data, mitigate operational risk and enhance their search for liquidity,” says Sun.

Emerging-market interest rate swaps (IRS) is another focus area for Tradeweb. Sun tells Asia Risk that the firm’s emerging-market IRS offering saw average daily volumes of $4.9 billion during the first half of 2021 across the 13 markets it currently covers (Poland, Czech Republic, Hungary, South Africa, Brazil, Mexico, Chile, Colombia, Singapore, Hong Kong, South Korea, India and China).

The Libor transition will also be an increasingly important topic, as investors look to the new reference rates for their deals. Sun expects clients in Asia to use Tradeweb’s new reference rate tools more as the Libor deadline looms closer.

“As the first ever trading venue to facilitate the electronic execution of Sonia [sterling overnight index average] futures, we are pioneering this fundamental change in financial markets as Libor loses its regulatory support at the end of 2021. We have followed the Libor transition closely, and fine-tuned our offering to ensure that our clients can make the switch without any disruption to their business,” he says.