Tradeweb Markets, a provider of fixed income marketplaces, has seen a 34 per cent year-on-year increase in trade volume for European government bonds in the first half of 2013, and 31 per cent growth for European cash credit volume during the same period.
Asset managers and other institutional investors have been executing more government and corporate bond business on electronic platforms over the past several months. Tradeweb estimates approximately 50 per cent of dealer-to-customer European government and cash credit bond volume is now traded electronically. The growth of e-trading in European credit markets has been particularly rapid – in late 2010 less than 20 per cent of its volume was executed on electronic platforms.
“Electronic execution has become the cornerstone of modern European government and corporate bond trading, even in challenging market conditions,” says Enrico Bruni, head of Europe and Asia businesses at Tradeweb. “Our clients on both the buy- and the sell-side are looking to Tradeweb to help them efficiently manage their trading activity. Continued growth in our volumes reflects this accelerating trend.”
Several key factors support this shift in trading behaviour as institutional investors seek efficient tools throughout the trade workflow, including:
· Request for quote (RFQ) trading continues to offer greater price transparency and best execution for buy-side customers while accessing a deep pool of liquidity.
· List trading allows asset managers and other real-money investors to execute large numbers of smaller trades simultaneously. Index fund managers use this tool to make the rebalancing process faster and more efficient when realigning fund weightings to benchmark indices. Year-on-year list trade volumes in 2013 for European government bonds and European credit have increased 45 and 83 per cent, respectively.
· Integration of Tradeweb with client systems reduces manual intervention during the execution process and facilitates trade processing and reporting. More than 80 per cent of European credit and 73 per cent of European government bond trades executed on Tradeweb are processed via integrated links, each up around 15 percentage points from two years ago.
“There is clear movement to electronic trading in both mature fixed income markets and products where e-trading is in its early stages. Market participants are seeking out innovative ways to address the challenges of today’s global financial markets,” says Lee Olesky, chief executive of Tradeweb. “Our management team in Europe continues to ensure that the Tradeweb business is well-positioned to address the ever-evolving needs of our clients.”