Electronic trading platforms saw net growth in the fixed income space for October, although risk assets faced headwinds.
Tradeweb saw its total trading volume for October 2023 reach US$37.2 trillion with average daily volume (ADV) for the month hitting a reported record US$1.75 trillion, an increase of 66.3% year-over-year (YoY).
The firm saw US government bond ADV increase 27.7% YoY in October 2023, while European government bond ADV was up 12% YoY to US$42.3 billion. The firm said these “record” government bond volumes were boosted by growth across all client sectors and sustained rates market volatility.
Fully electronic US credit ADV was up 24.9% in October 2023 YoY to US$5.6 billion, and European credit ADV was up 27.4% YoY to $2.1 billion. Within that, fully electronic US investment grade ADV stood at US$4.9 billion in October 2023, an increase of 27.9% YoY, up from US$3.8 billion in October 2022. Fully electronic US high yield ADV stood at US$689 million in October 2023, up 7.1% from US$643 in October 2022.
According to analysts at Morgan Stanley, Tradeweb’s US investment grade credit share was running higher than September levels while high yield share was lower than September levels.
Municipal bonds ADV was up 2.1% YoY to $472 million in October 2023, which reflected “healthy” institutional and retail client activity, Tradeweb said, as broader municipal bond market volumes declined 1.8%.
US exchange traded fund (ETF) ADV was down 6.5% YoY to US$7.2 billion and European ETF ADV was up 24.1% YoY to US$2.6 billion.
MarketAxess saw its total credit ADV for October 2023 up 1.8% YoY to US$12.7 billion from US$12.4 billion, and up 7.6% against the previous month.
Investment grade ADV for October 2023 stood at US$6 billion, an 8% increase YoY from US$5.5 billion. High yield ADV decreased 19% over the same period, from US$2 billion to US$1.6 billion.
Municipal bond ADV was up 11% YoY in October 2023, up from US$480 million to US$532 million.
Total rates ADV for October 2023 increased 4% from US$19.6 billion to US$22.3 billion.
Morgan Stanley analysts posited that MarketAxess volumes are broadly in-line or slightly better than management suggested on its 25 October earnings call. At that time, MarketAxess noted that with five trading days left in October, investment grade share and volumes were running slightly above September levels and both high yield share and volumes were running above September levels.
Chris Concannon, CEO of MarketAxess, said, “We delivered solid growth in US high-grade, Eurobonds and municipal bond ADV in October compared to the prior year, and estimated market volumes registered strong increases versus September 2023, reflecting an improving market backdrop.”
“We benefited from an increase in credit spread volatility and ETF market maker activity, which drove improvement in U.S. high-yield ADV and estimated market share compared to September. The adoption of MarketAxess X-Pro continues to expand, with 35% of portfolio trading volume executed over the platform in October, up from 18% in third quarter 2023,” Concannon added.
CME Group reported its highest ever October ADV with 25.2 million contracts, with overall volume growing 11% against October 2022 and its strongest interest rate derivatives ADV in its history for October 2023. Its cash and spot market ADV both fell year-on-year.
CME Group reported in October that its 5-Year US treasury note futures ADV increased 25% to 1.3 million contracts while 10-Year US treasury note options ADV increased 30% to 863,000 contracts and 2-Year US treasury note futures ADV increased 33% to 675,000 contracts across the same period.
US Treasuries trading on CME Brokertec fell 8% year on year, while FX spot volumes on EBS fell 24% over the same period.
The firm’s interest rate options ADV increased in October, by 12% YoY, to 2.8 million contracts.
Cboe saw its combined October ADV reach more than 4.5 million contracts, a 26% increase YoY and a new monthly record.
The firm’s S&P 500 Index (SPX) options set a new monthly record in October, with an ADV of 3.5 million contracts. Cboe Volatility Index (VIX) options reported ADV of 880,000 contracts, its highest since March 2020.
October’s results are the first for new CEO Fred Tomczyk. On his first earnings call, Tomczyk unveiled three key strategic priorities: sharpen and narrow the strategic focus of the firm; ensure efficient capital allocation; and develop talent and succession planning.
He said, “I believe our sharpened strategy will help the margin profile of our business and increase shareholder value over the longer term. I will also focus on ensuring our capital allocation plan is delivering the kind of returns our shareholders expect from Cboe.”
© Markets Media Europe 2023
