Tradeweb to Launch Southbound Bond Connect with CFETS
Tradeweb Markets, a leading global operator of electronic marketplaces for rates, credit, equities and money markets, announced it will expand its trading link with CFETS under the Bond Connect channel on September 24 to allow mainland China onshore institutions to invest in Hong Kong’s fixed income markets.
We're expanding our trading link with CFETS under #BondConnect on September 24 to allow mainland China onshore institutions to invest in Hong Kong’s fixed income markets, providing them with more ways to diversify their #fixedincome investment portfolios. https://t.co/I0OTxL8kzB pic.twitter.com/PNYlDaPxRq
— Tradeweb (@Tradeweb) September 15, 2021
Tradeweb was the first platform to enable offshore investors to buy and sell Chinese onshore bonds via its fully electronic request-for-quote (RFQ) trading link to Northbound Bond Connect. More than $900 billion in CNY cash bonds trades has been done via Tradeweb since the launch of Bond Connect in July 2017.
Last year, Tradeweb once again partnered with the China Foreign Exchange Trade System (CFETS) to deliver the first fully electronic RFQ access to China Interbank Bond Market (CIBM) Direct, another popular route for overseas investors connecting to and trading in the Chinese onshore bond market.
Lee Olesky, CEO of Tradeweb Markets, said: “After being selected as the first platform to link to Bond Connect and China’s $15 trillion onshore bond market, we are honored to be chosen again as a launch partner for Southbound trading. This latest milestone is the result of Tradeweb’s close collaboration with CFETS to create access channels that help open up China’s financial markets. Tradeweb is at the forefront of digitizing and modernizing fixed income trading, so we look forward to working collaboratively with local participants to improve their access to liquidity and workflow efficiency in these markets.”
Yi Zhang, President of CFETS, commented: “We are pleased to be partnering again with Tradeweb to achieve Bond Connect’s fundamental objective to serve as a mutual access pathway for fixed income investors in mainland China and overseas. The success of Northbound trading is proof that electronic execution is the way forward for bond market participants, and we are excited to see how it can further enhance onshore investors’ Southbound trading experience.”
Through the new Southbound Bond Connect solution between CFETS and Tradeweb, onshore institutional investors can conduct price discovery, trade negotiation and trade execution with Tradeweb’s network of regional and international liquidity providers in the offshore bond markets, via fully-electronic RFQ. The expansion of Bond Connect provides onshore institutions with more ways to diversify their fixed income investment portfolios.
James Sun, Tradeweb’s Head of Asia, added: “The launch of Southbound trading is a significant development for Bond Connect and the result of many years of meticulous planning and hard work from CFETS and Tradeweb in China. Our teams in Shanghai and Hong Kong continue to work closely with investors and liquidity providers to ensure the success of the new trading channel, and we look forward to collaborating with them further to streamline onshore investors’ access to the international fixed income markets.”
Tradeweb has been regulated in Hong Kong and Singapore since 2004. Its first Asia local currency products – Japanese Government Bonds and Yen Interest Rate Swaps – went live in 2008. Three years later, Tradeweb expanded institutional Credit trading into Asia.
In 2014, Tradeweb hosted the first electronic JSCC-cleared yen swap transaction by a Japanese bank, followed by the first regulated Yen swap trade on its Electronic Trading Platform (ETP) a year later. In 2018, Tradeweb became the first Bond Connect platform to launch portfolio allocation. The firm also operates an Asia-listed ETF marketplace and an EFP (Exchange for Physical) platform in the Australian market. In line with its ongoing commitment and investment to its growing presence in the region, Tradeweb hired James Sun earlier this year to head the Asia business from its Shanghai office. Other Tradeweb office locations in Asia include Tokyo, Hong Kong and Singapore.
The platform is in conversations to partner with an execution venue.
Global credit trading is increasingly relying on electronic platforms.
Benefits include a reduction in settlement and counterparty risk, and lower risk of market disorder.
Liquidity challenges in bond markets in the pandemic forced the buy side to find new trading partners.
Connection to China Foreign Exchange Trade System provides enhanced access to onshore bond market.