Electronic trading in US fixed income is hotly contested between Bloomberg, MarketAxess, Tradeweb and Trumid all competing for market share of trading cash bonds in the dealer to client (D2C) market.
The dynamics behind these struggles will be closely discussed at the Fixed Income Leaders’ Summit in Boston, but there are three major battles being fought around innovation:
- D2C trading interfaces;
- D2C trading protocols;
- Dealer-initiated liquidity.
“Clients are focused on being able to do their job more efficiently and more intelligently,” said Billy Hult, CEO at Tradeweb, speaking to analysts on the firm’s Q1 earnings call. “If pricing was the main focus, our largest competitor in institutional rates market would have all that business. And if it was the main focus, we’d be the full leader in the credit market. These are complex dynamics.”
Trading interfaces
Tradeweb’s recent success in D2C has been supported by its ongoing integration with Aladdin, the BlackRock-owned order management system (OMS). The integration is allowing orders to be staged within Aladdin and directly traded via Tradeweb, without the need to rekey orders onto the platform, as had previously been needed.
Hult said the partnership with Aladdin is an important component of Tradeweb’s growth strategy in credit, particularly in high yield (HY). Having established dealer access and piping inventory data into Aladdin during the first phase in late 2023, the firm is currently building out the second phase for all-to-all trading, with functionality to respond to auto inquiries via an Aladdin dashboard.
“In Phase 3, clients will be able to initiate a request for quote (RFQ) on Tradeweb from within Aladdin and then also use our automation tools,” he said. “We expect this phase to be completed over the next 12 months, [and] on volumes, revenue and market share, we expect this to be a steady progression as we move forward with more clients within Aladdin using Tradeweb functionality.”
Jason Quinn, chief product officer & global head of sales, Trumid, says, “Within our own UI, we look to deliver not only trading execution tools, but a robust offering of pre- and post- trade analytics designed to help our clients make more informed trading decisions. This can be demonstrated in portfolio optimizations, pricing estimations, or decision-making tools to guide to which protocol is optimal when executing a particular trading axe. At Trumid, we have always been a design and UX driven technology focused platform.”
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