Electronic trading fixed income platforms saw a slight drop off in volume relative to October, but strong activity against the same period last year.
Bond market operator, MarketAxess, saw US investment-grade average daily volume (ADV) of US$6.9 billion up 15% compared to the prior year, but down 18% compared to September 2024. High-yield ADV was US$1.5 billion down 8% year on year (YoY), but increasing 4% against September 2024. Estimated market ADV increased 15% compared to the prior year, but fell 5% compared to September 2024.
Emerging market ADV was US$3.7 billion, a YoY increase of 33% and a 1% drop versus to September 2024. The year-over-year increase was driven by a 42% increase in hard currency ADV, and a 22% increase in local currency ADV.
Eurobonds ADV of US$2.3 billion was up 37% compared to the prior year, but slightly down 1% compared to September 2024.
Municipal bond ADV hit US$578 million increasing 9% YoY and in line with September 2024. Estimated market ADV decreased 33% compared to the prior year, but increased 12% compared to September 2024.
The firm saw US$1.2 billion in total portfolio trading ADV which increased 72% compared to the prior year, but decreased 19% compared to September 2024.
MarketAxess estimates US high-grade and US high-yield TRACE portfolio trading market ADV decreased 22% compared to September 2024. While portfolio trading represented 10% of US high-grade and US high-yield TRACE in October 2024, compared to 12% in September 2024.
Open Trading ADV of US$4.5 billion , increased 17% compared to the prior year, but decreased 8% compared to September 2024. Open Trading share of total credit trading volume was 35% , in line with the prior year and September 2024 levels.
Dealer request for quote (RFQ) ADV of US$1.3 billion across all credit products increased 26% compared to the prior year, but decreased 8% compared to September 2024.
AxessIQ , the order and execution workflow solution designed for wealth management and private banking clients, achieved ADV of US$161 million , up 39% compared to the prior year, but down 3% compared to September 2024.
The firm saw total rates ADV of US$31.2 billion, up 54% compared to the prior year, and up 9% compared to September 2024.
Chris Concannon, CEO of MarketAxess, said, “We delivered the second straight month of record total trading ADV in October, driven by continued robust market volumes and strength in our international businesses. Our rates business also generated record ADV in October, surpassing the previous monthly record set during a period of extreme market volatility in March 2020.”
He continued, “While we are disappointed with the absolute level of market share in US high-grade in October, we were pleased to see record trading volumes, an increase in US high-yield estimated market share compared to September and an increase in our preliminary total credit fee capture during the month. Most importantly, our preliminary total credit variable commission revenue in October was slightly above September levels. We believe the decline in our high-grade market share was driven by lower portfolio trading and a client shift to large block trading in the market. Large portfolio trades in the market and the mix of activity across US high-grade TRACE can generate significant swings in market share without materially impacting revenue generation. We are continuing the roll-out of X-Pro to our global client base and we now have our block solution in the market, which we believe will be integral to the success of our ‘high-touch’ strategy.”
Multi-asset market operator, Tradeweb, saw fully electronic US IG credit ADV up 35.3% YoY but down 16% month-on-month (MoM) to US$6.6 billion, with high yield at US$787 million which was up 14.6% YoY but down 8% from the previous month. European credit ADV was up 17.6% YoY to US$2.5 billion.
US credit volumes were reportedly driven by increased client adoption, most notably in request-for quote (RFQ), portfolio trading and Tradeweb AllTrade, while European credit volumes were driven by high volumes in Tradeweb’s Automated Intelligent Execution tool (AiEX) and Tradeweb AllTrade.
Municipal bonds ADV was down 16.7% YoY to US$394 million, given lower tax-loss harvesting compared to the prior year as well as subdued secondary volumes due to record new issuance in October.
Credit derivatives ADV was up 13% YoY to US$13.6 billion following increased hedge fund and systematic account activity, along with heightened credit volatility, led to increased swap execution facility (SEF) and multilateral trading facility (MTF) credit default swaps activity.
In the rates space, US government bond ADV was up 34.9% YoY to US$220.8 billion and falt on the previous month, supported by record volume in the firm’s institutional business, as well as strong growth in wholesale and retail volumes. Growth was backed by increased adoption across a wide range of trading protocols, heightened activity across a diverse set of client types, and favourable market conditions, Tradeweb reported.
European government bond ADV was up 26.3% YoY to US$53.4 billion, but down 5% MoM. Strong European government bond market activity, as well as a growing client base, contributed to the European government bond volumes on the platform.
Mortgage ADV was up 28.2% YoY to US$248.6 billion. To-Be-Announced (TBA) volumes hit a new record, fuelled by continued strong dollar-roll activity and increased macro-rate volatility.
Swaps/swaptions ≥ 1-year ADV was down 9.4% YoY to US$416.6 billion and total rates derivatives ADV was up 5.9% YoY to US$793.2 billion. Swaps/swaptions ≥ 1-year activity was down due to a 40% YoY decline in compression activity, which carries a lower fee per million. Quarter to-date compression activity as a percentage of swaps/swaptions is trending lower than 3Q24. Strong risk trading volume in swaps/swaptions was driven by volatile markets in the run up to the UK budget and the US election. Traders continued to use the request-for-market (RFM) protocol for risk transfers. Emerging markets swaps growth reportedly remained strong.
CME Group, the derivatives marketplace has recorded an average daily volume (ADV) of 24.3 million contracts. Interest rate derivatives led the charge, reaching an October ADV of 12.5 million contracts, up 6% from the previous year. US Treasury futures, reached 5.5 million contracts. This growth extended into related products, with SOFR (Secured Overnight Financing Rate) futures and options achieving an ADV of 5 million contracts. Interest rate options ADV reached 3.1 million contracts, while US Treasury options hit 1.5 million contracts traded daily.
BrokerTec, CME Group’s fixed income trading platform, recorded an 11% increase in US repo average daily notional value (ADNV) to US$316.7 billion. European repo ADNV grew modestly by 1% to €299.7 billion. EBS, CME Group’s electronic trading platform for foreign exchange saw Spot FX ADNV increased by 15% to US$58.3 billion, while FX Link ADV rose 193% increase to 54,000 contracts, equivalent to US$5 billion in notional value, reflecting stronger demand for currency risk management amid market uncertainty.
In Europe, trading activity also picked up, with BrokerTec’s European repo market averaging €300 billion per day, up 4% from September. The European Central Bank (ECB) cut its key interest rate by 25 bps on October 17, a move that went into effect on October 23. This rate reduction spurred increased trading volume, as investors adapted to the ECB’s monetary policy shift.
BrokerTec reported that average daily trading in US Treasuries reached US$113 billion in October.
CME Group Chief Economist Erik Norland noted the broad rise in global bond yields, with “US Treasury yields climbing close to 50 bps across the board due to unexpectedly strong US economic data and worries about future deficits. U.K. yields followed suit, rising about 40 bps as the government announced plans for significant new spending paired with tax hikes. Eurozone bond yields increased by 20-25 bps, although the European economic data were generally softer than those in the U.S.”
