Best Fixed-Income Trading Platform: Tradeweb

Terry Flanagan

FIXED INCOME HAS remarkable breadth as an asset class, with thousands of issues spanning government, corporate, agency, and municipal debt, trading in the retail, insti­tutional, and inter-dealer markets every day.

One company that provides an electronic-trading venue for as many of these fixed-income securities and derivatives as can be traded electronically is Tradeweb.

Lee Olesky, Tradeweb

Lee Olesky, Tradeweb

“There’s no one else who is out there in each of the three markets that make up fixed income,” said Tradeweb Chief Execu­tive Lee Olesky. “We have 750 people at Tradeweb Markets focused on fixed income and derivatives trading across the entire spectrum, globally. There’s no other com­pany with such a comprehensive focus on electronic trading in OTC fixed income and derivatives.”

New York-based Tradeweb, which launched in 1998 with trades of highly liquid U.S. Trea­suries, has expanded its menu to include a robust array of fixed-income issues, includ­ing esoteric securities such as Canadian debt securities, interest-rate swaps, CMBS/CMBX, covered bonds, and preferreds. But more important than the width of the product suite is the depth of liquidity in each product.

To that end, Tradeweb has more than 50 banks making markets on its system, plus about 2,000 buy-side institutions. “We have a community of market participants who are in the market every day trading fixed-income and derivatives products,” Olesky told Mar­kets Media. “They know when they come onto the Tradeweb system, they’ll be able to find liquidity and execute efficiently.”

One major 2013 accomplishment for Tradeweb was winning regulatory approval for, and launching, two swap execution facilities to handle trades of derivatives that historically have been transacted via private negotiations. The regulatory date for mandatory SEF trading just passed on Feb. 15, and it will take time for the busi­ness to ramp up, but market participants say Tradeweb, as an established trading venue, has a good chance of succeeding in the space.

“We have continued to innovate, which is what we’ve been doing at Tradeweb for years,” Olesky said. “That means adding more functionality to the system so that users can not just execute their transactions, but really have seamless integration with their systems, pre-trade and post-trade.”

“As we launched our SEFs in the U.S. and as the market has been evolving from a regulatory standpoint, I think we’re seen as a real thought leader, working with regula­tors and market participants to design a business that really speaks to the needs of the market and our customers,” Olesky continued. “2013 was a tough year in the fixed-income and derivatives market, yet Tradeweb continued to grow…Even in a tough market environment, we’ve continued to invest in the business, increase the bot­tom line, and introduce new products and functionality.”

The products may be different, but the end goal for a trading-venue operator is to lower the cost of trading for its clients. Tradeweb does this through technology and econo­mies of scale. “It’s a great advantage to be able to reduce the costs of these businesses by leveraging technology, whether it’s an order book, or a fast matching engine that we have in our IDB business,” Olesky said.

Tradeweb expects that 2013 themes and initiatives will, in a broad sense, carry over to this year. “We continue to add new products across the business, whether it’s our inter-dealer broker business though Dealerweb, or our institutional business, or our retail business,” Olesky said. “In retail for example, we acquired BondDesk in November and we are combining that with our existing retail business to create a new brand and busi­ness line called Tradeweb Direct.”

Added Olesky, “2014 is shaping up as a very good year for Tradeweb in terms of invest­ment in each of our core businesses, expan­sion of products, and the overall growth of more electronic trading and products.”

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