Morgan Stanley analysis of the monthly reports from market operators Tradeweb and MarketAxess, has shown wins and losses in market share for both platforms.
Looking at the TRACE credit volumes reported by MarketAxess, its analysts noted these were up +18% year-on-year (YoY) in November, with investment grade (IG) trading up +26% and high yield (HY) down -1% YoY. Over the same period Tradeweb’s TRACE reported volumes for credit were up +15% YoY in November, with IG up +25% and HY down -8% YoY.
Trading volumes reported by MarketAxess in credit saw IG credit up +23% YoY and HY credit up +31% YoY which Morgan Stanley calculated as a drop in market share of -49bps YoY in IG credit, and growth of +468bps YoY in HY credit. Tradeweb’s volumes were up +19% YoY in IG and down -14% YoY in HY which the bank estimated gave Tradeweb a slight market share gain of +2bps YoY in IG and slight share loss of -30bps YoY in HY.
Chris Concannon, president and COO of MarketAxess commented, “November was another very strong month, as we continue to build momentum going into 2023. We generated record total credit ADV, with record ADV in Eurobonds and municipal bonds. We also delivered another strong month of market share gains across most of our product areas, driven in part by the powerful benefits of Open Trading, our differentiated liquidity pool.”
He noted that the firm’s estimated price improvement for users of open trading was approximately US$83 million in November, which equates to approximately US$923 per million saved for its clients.
“Year-to-date estimated price improvement is now approximately US$866 million, 65% above the prior year,” he said. “The strength of our performance reflects the enhanced foundation for growth we have established over the last several years by broadening and enhancing our global product portfolio, and we believe we are very well-positioned going into 2023.”
MarketAxess highlighted that is had a record US$13.1 billion in total credit average daily volume (ADV) in November, representing a 25% increase compared to the prior year and surpassing its previous record set in March 2021, with a 23% increase in US IG ADV to US$5.9 billion and US high-yield ADV hitting US$1.9 billion.
It also reported an ADV of US$3.1 billion for emerging markets (EM) which was up 9%, while itr estimated it had a record 22.1% (+580 bps) of emerging markets market share..
The firm saw a record 38% of its total credit trading volume executed via Open Trading, its all-to-all channel, up from 36%. Estimated price improvement via Open Trading was approximately US$83 million, and US$866 million year-to-date. Average estimated price improvement per million via Open Trading in November was US$923.
Tradeweb reported its fully electronic US credit ADV was up 16.6% YoY to US$4.6 billion and European credit ADV down 3.6% to US$1.8 billion. It noted that strong US and European credit volumes reflected continued client adoption across its trading protocols, with record volume in Tradeweb AllTrade and portfolio trading contributing to a reported record fully electronic US IG activity and strong volumes across the platform.
In US government bonds its ADV was down 5.2% YoY to US$137 billion, while European government bond ADV was down 1% to US$34.3 billion. The firm observed that US government bond activity was lower YoY, as industry volumes declined with higher US institutional and retail government bond activity more than offset by declines in wholesale trading volumes. Higher interest rates drove record volumes in the retail market. Strong European government bond trading was driven by heightened rates market volatility.
©Markets Media Europe 2022
