Buy-side trading system of the year: Tradeweb

Tradeweb continues to enhance its trading system to create greater connectivity across its markets and products to help clients execute trades more efficiently and seamlessly.

James Sun, managing director and head of Asia at Tradeweb, says the firm constantly looks at segments of the market that could be electronified further, with a particular focus on emerging markets.

“We are present in many markets across different geographies and, over the next year, we plan to focus on the best ways to link those markets together and connect them through our various products,” he says.

Tradeweb’s emerging market interest rate swaps capabilities currently covers 13 markets, including Brazil, Chile, China, Colombia, Czech Republic, Hong Kong, Hungary, India, Korea, Mexico, Poland, Singapore and South Africa. It plans to add more markets shortly to cover all clearable currencies in Asia.

In 2021, average trading volumes on the Tradeweb platform were over $1 trillion. In Asia, its China offering saw average trading volumes in CNY cash bonds increase by almost 14% from the previous year. Over the same timeframe, Tradeweb recorded increases in Asia-Pacific interest rate swaps by 116%, Japanese yen swaps by 42%, and Japanese government bonds by 28%.

Today, more than 2,500 clients connect to Tradeweb, encompassing banks, asset managers, hedge funds, insurance companies, wealth managers and retail clients. Clients have access to over 40 products with solutions in rates, credit, money markets and equities, in more than 65 countries globally. Tradeweb provides solutions across the trade lifecycle, including pre-trade, execution, post-trade and data.

Tradeweb will focus on expanding its automated trading offering through its Automated Intelligent Execution (AiEX) tool. Over the past year, AiEX saw an uptake in adoption driven by efficiency gains trading desks can realise as activity continues to grow.

The rules-based solution allows traders to capitalise on strategic trading opportunities and increase reactivity to market conditions with greater execution speed.

This is key in Asian markets, partly due to the ongoing inclusion of Chinese bonds into global indexes, as it generates many trades that can be handled automatically. At the same time, it addresses challenges from the region’s multiple time zones by automating trades outside normal operating hours to get more favourable pricing.

Sun says Tradeweb plans to invest in more asset classes to help clients streamline and automate their workflows, which essentially will free up time to focus on trades that require their expertise.

The AiEX framework can be used seamlessly across products, which is proven by its use by asset managers, private banks, sovereign wealth funds and hedge funds.

Another area Tradeweb continues to work on is its China connectivity. It was a launch partner of the Southbound part of Bond Connect, which went live in September 2021. The new channel works by creating connections and interoperability for trading, custody and settlement between the mainland and Hong Kong.

The Southbound part of Bond Connect is a multi-faceted collaborative effort between Tradeweb and China Foreign Exchange Trade System (CFETS). The collaboration began in 2017 when Tradeweb was selected as the first trading link to the Northbound channel of Bond Connect. Tradeweb worked with Chinese stakeholders and played a key role in the design, creation and development of the initiative.

The two parties also collaborated on the China Interbank Bond Market (CIBM Direct), another main entry point to the Chinese debt markets for foreign investors, to deliver the first fully electronic request-for-quote access to CIBM Direct.

“We are always exploring ways for overseas investors to connect to the Chinese onshore bond market and, in 2020, we were the first platform to electronify a previously voice-only access channel into China,” says Sun.

Tradeweb CIBM Direct Link also provides access to a wide range of fixed-income instruments in China’s bond market, including cash bonds in the interbank market such as government bonds, People’s Bank of China bills, financial bonds, commercial paper and medium-term notes.

“So, when the greenlight was given for Southbound, we were a natural partner for CFETS given our history and shared vision of creating streamlined access to global investment to better meet onshore investors’ demand,” says Sun.

As offshore rates have generally been going up while onshore rates have been going down, he adds that Tradeweb has seen a pick-up in activity for the Southbound channel.

Tradeweb’s electronic trading platform centralises access to liquidity for investors, using technology that delivers pre-trade transparency and streamlined execution in a fully automated workflow. Onshore institutions can use Tradeweb in the Southbound channel to conduct price discovery, trade negotiation and execution with international liquidity providers.

Tradeweb also continued to provide support throughout the pandemic in 2021, by ensuring seamless workflows in a period of changing work arrangements. It is part of a broader effort to pioneer electronic trading across Asia, assisting investors at every stage of trade execution: price discovery; operation efficiency; and access to liquidity. Tradeweb’s operations in the region are in China, Hong Kong, Japan and Singapore.