A new era of intelligent execution

By Mark Russell, Head of Credit, Europe, Tradeweb

Electronic trading has earned its place as an indispensable part of fixed income markets, replacing voice execution as the new standard across a multitude of fixed income asset classes. Traders are increasingly leveraging electronic marketplaces to access a broader and more diversified network of qualified market participants and, in turn, a deeper pool of liquidity.

Furthermore, the accelerating pace of fintech innovation has revealed the potential for greater end-to-end workflow enhancements that can help traders cut costs and reduce risk. With this in mind, at Tradeweb we are focused on delivering solutions that enable a fully-electronic trading experience, minimising operational inefficiencies and time-consuming processes.

In today’s dynamic financial environment, it’s no longer sufficient to have access to data ahead of making investment decisions. The proliferation of data necessitates behind-the-scenes analysis and output customisation to simplify its consumption. In addition to pre-trade intelligence, it’s also essential to prove post-trade that all the required steps were taken to ensure these decisions were well informed.

Through all stages of the trade lifecycle, we supply our clients with the necessary tools to make sense of the data available to them, and also to provide much-needed answers to questions around counterparty selection and price discovery. Over the past few years we have been blending pre-trade market intelligence, execution flexibility and automation with post-trade enhancements to further streamline our customers’ trading workflows.

Consequently, Tradeweb has developed an ever-expanding suite of pre-trade tools, offering traders deeper and more intelligent insights into execution data. These range from our long-established proprietary trading composites and real-time streaming prices to our daily liquidity scores, helping investors evaluate the ease with which bonds can be bought or sold at the point of trade.

Meanwhile, clients trading US cash credit instruments can now view accurate and objective reference prices for more than 10,000 bonds thanks to our Automated Intelligent Pricing (Ai-Price) innovation. Ai-Price aggregates pricing data on an unprecedented scale, supplying market participants with pre-trade price transparency to aid in constructing portfolios, understanding liquidity and informing trade strategy.

Pushing the frontiers of execution

The natural evolution to our credit proposition is to transform pre-existing trading models by further enriching and expanding our Automated Intelligent Execution (AiEX) tool. AiEX allows traders to set up parameters that dictate how orders are directed and executed, thus fully automating requests-for-quote (RFQs) for smaller trades, while guaranteeing that the best price is achieved. This means users are afforded more time and greater control over higher-value trades, and are also better able to prove best execution. As the adoption of e-trading by fixed income market participants continues to increase, their readiness to embrace automation is noticeably on the rise.

In response to client feedback, our credit platform has maintained a high level of flexibility to enable customisation of trading parameters. This allows us to accommodate multiple requirements and motivations across our client range, based on variables such as order size, instrument liquidity, time sensitivity and risk appetite. Using market intelligence, a trader may decide that the prevailing liquidity conditions for a particular credit trade will merit use of the Blast All-to-All (Blast A2A) protocol, thereby sourcing a spectrum of relationship and non-relationship dealers. Conversely, the trader may decide that the more judicious course of action in leaner market conditions is to select a smaller number of liquidity providers, based on analysis of axes, prices and direction, a process which Tradeweb expedites via its SNAP tool.

Moreover, Tradeweb understands the importance of streamlining traders’ workflow via straight-through-processing. Our integration with clients’ order management systems enables us to enhance our reporting capabilities, incorporate best execution policies, and support decision-making via transaction cost analysis (TCA) information. By using TCA to monitor both the performance and cost-effectiveness of their trading activities, bond traders can identify areas where improvements can be made, and take appropriate action when necessary. The ability to access transaction metrics that quantify execution performance, means traders are better-equipped to provide a more transparent and comprehensive reporting service to their end clients. This delivers greater scope for proof of differentiation, allowing traders to demonstrate where and how they are best placed to add value.

One size does not fit all

However, our credit offering doesn’t just cater for individual traders and their inevitably unique styles. We are fully aware that entire markets have their own characteristics and nuances, and therefore not every single tool or process may apply to all. As a result, while we make strides to offer consistent choices across the various regions and products we cover, we are also well positioned to meet local requirements. Our newly-launched Global Credit User Interface provides our clients with a single comprehensive platform, where they can leverage the same protocols and features available across all Tradeweb marketplaces to satisfy their credit trading needs, without compromising on the market differences, no matter where they are based or what instruments they trade.

The industry is primed for an evolutionary leap that will further enhance the trading experience throughout the entire trade lifecycle via more detailed information, faster analysis, and strategic execution. In this next wave, the combination of data science with flexible market infrastructures that best suit investors’ strategies will give rise to a new era of intelligent execution. By helping buyers and sellers to derive new insights into the trading process, marketplace operators such as Tradeweb can bring new efficiencies to a diverse and expanding network of users.

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