Last month saw electronic trading platforms continue to grow, but with activity hit by the concerns around financials, leading multi-asset market operator, Tradeweb, to estimate broader TRACE credit volumes declined by 9.2% year-on-year (YoY).
Chris Concannon, CEO of bond market operator, MarketAxess, said, “After a very strong start to the year, characterised by higher levels of industry volumes, April credit market volumes were weaker than prior months. We believe that this is due to short term dislocations in the banking sector and the impact of lower new issue activity.”
MarketAxess reported US investment grade average daily volume (ADV) of US$5.7 billion, US high-yield ADV of US$1.4 billion with trading volume from ETF participants decreased approximately 50% in April 2023 versus March 2023.
Emerging markets ADV of $2.6billion, down 10.3%; with a decrease of 21.8% in emerging markets estimated market ADV.
In Eurobonds, the platform saw a 63.3% increase in to a record US$2.3 billion ADV, driven by a large amount of client crossing programs in April that carry a lower average fee per million. The platform also saw a 14.6% increase in municipal bond ADV to US$392 million.
Its all-to-all trading platform, Open Trading, achieved a 36% share of total credit trading volume with an estimated price improvement of approximately US$48 million.
The impact of crossing programs, combined with a mix-shift in total credit volume, specifically lower contribution from US high-yield, were primary drivers of the decline in preliminary total credit fee-per-million in April 2023 compared to March 2023, hitting US$5, compared to $3.92 in April 2022.
Meanwhile, Tradeweb Markets reported fully electronic US credit ADV was up 2.8% YoY to US$4.1 billion and European credit ADV was up 0.6% to US$1.9 billion, reflecting the ongoing client adoption of Tradeweb’s protocols, including request-for-quote (RFQ), portfolio trading and Tradeweb AllTrade®, including record share in all-to-all trading, Tradeweb’s share of fully electronic U.S. High Grade and U.S. High Yield TRACE was 14.6% and 6.1%, respectively. Relatively subdued European credit market activity weighed on overall volumes. Credit derivatives ADV was down 42.3% YoY to US$9.3 billion reflecting broader market declines, with industry swap execution facility (SEF) volumes reportedly declining 41.63% YoY.
In rates Tradeweb saw US government bond ADV down 11.5% YoY to US$120.2 billion, while European government bond ADV was up 9.7% to US$36.8 billion. The US market had headwinds from declining wholesale trading as broader treasury market volumes also declined, despite reportedly strong retail and institutional US government bond activity. Driven by higher interest rates. European govie volumes were supported by strong hedge fund activity amid volatile markets and a pick-up in UK Gilts activity.
Municipal bonds ADV was down 25.3% YoY to US$287 million, reflecting broader municipal bond market slowdown amid low issuance, as broader muni market volume declined 27.42% YoY.
©Markets Media Europe 2023
