Electronic platforms saw tough market conditions hitting volumes, reflecting lower trading volatility overall in the market, although Tradeweb was able to post net average daily volume growth by notional of over 10%.
CME Group saw its average daily volume (ADV) notional for US Treasury bonds drop 22.5% in June 2023 year-on-year (YoY) while its interest rates results were mixed.
Tradeweb
In June, Tradeweb saw its total trading volume for the month hit US$29.3 trillion, while its average daily volume (ADV) for the month was US$1.38 trillion, an increase of 10.8% year-on-year (YoY), and 2% quarter on quarter.
In the government bond space, ADV in June was up 4.99% YoY to US$359 billion which month-on-month was an increase of 0.21%. In credit, Tradeweb saw US investment grade (IG) average daily volume 10.5% month-on-month and 42% year-on-year to reach US$4.3 billion.
In US high yield, ADV was up 12% month on month and 2% year on year at US$619 million.
European Credit ADV was up 4% on the prior month and 23% on the year before, at US$2 billion. Tradeweb’s municipal bond ADV in June stood at US$314 million, dropping 2.25% month-on-month, and 17.97% from US$383 million. Tradeweb said municipal volumes reflected a broader decline in municipal market volumes given relative yield dynamics and limited new issuance.
For the whole of Q2 2023, total trading volume was US$81 trillion and ADV was US$1.3 trillion, an increase of 10.2% YoY. Government bond ADV fell 5% against the previous quarter and grew 1% against the previous year at US$345 billion. The firm said growth in retail and institutional US government bond volumes was strong and that higher interest rates continued to drive trading in the retail market.
Additionally, US and European government bond volumes were supported by sustained rates market volatility. At US$4 billion ADV for the quarter, Tradeweb’s US investment grade credit, was down 4.64% on the previous quarter from US$4.3 billion, but year-on-year was up 19.61% from US$3.5 billion in Q2 2022. High yield ADV was US$567 million, a fall of 16% on the previous quarter and 13% on the same quarter last year. Municipal bonds saw a 1% decline on Q2 to US$308 million ADV and a 22% decline against Q2 2022.
MarketAxess
MarketAxess hit a total ADV in Q2 2023 of US$27.8 billion, down 21% from Q2 2022.
The firm’s CEO, Chris Concannon, said, “June and second quarter market trends reflect dramatically lower credit spread volatility versus the prior year same periods. The second quarter trading range of credit spreads for US [investment]-grade and US high-yield bond indices was approximately a third of last year’s second quarter levels, reducing client activity for some segments of the market. Despite lower volatility, Open Trading share of total credit trading volume was in line with the prior year at approximately 34%, and we delivered estimated price improvement of US$157 million to clients in the quarter. Client adoption of our growing suite of trading automation tools remains strong and estimated market share trends continue to be positive in our international product areas and municipal bonds.”
In US investment grade, MarketAxess saw ADV for June fall 3% on the previous year to US$5.6 billion, and US high yield ADV was down 26% YoY, to US$1.5 billion. European credit was up 7% to US$1.7 billion. Government bond ADV for June was down 28% year-on-year, to reach US$15 billion, while municipal bond trading fell 2% to US$370 million ADV.
Looking at the quarter, MarketAxess recorded investment grade trading ADV of US$5.7 billion, a 2% decrease on Q2 2022, which the firm noted reflected the impact of a 17% increase in the new issue calendar compared to the prior year. In high yield, MarketAxess recorded trading ADV of US$1.5 billion in Q2, a 17% decrease on Q2 2022 volumes of US$1.5 billion.
Low credit spread volatility reduced trading activity by ETF market makers in US high-yield, MarketAxess said, with estimated US high-yield TRACE market ADV down 13.2% in Q2 2023. For Q2 2023, MarketAxess recorded an ADV for government bonds of US$15.6 billion, a 32% decrease against Q2 2023. Municipal bond market ADV decreased 30.1% in Q2 2023 against Q2 2022.
CME Group
In June 2023, CME Group saw US$99.5 billion in average daily notional volume for US Treasury bonds, a 22.5% YoY decrease from US$128.4 billion in June 2022, on its Brokertec platform. The firm’s interest rate derivatives rolling 3-month ADV for Q2 2023 stood at 11 million contracts, a 6% increase on Q2 2022 (10 million contracts).
Rates derivatives ADV for the month of June 2023 stood at 10.4 million, a 2% decrease against June 2022’s 10.6 million contracts. NB This story is a correction to a previous article which incorrectly stated reported figures.
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