Market operators MarketAxess and Tradeweb have released their December trading levels, with both seeing a monthly increase of 25% in credit trading average daily volumes (ADV).
Tradeweb reporting total trading volume for December 2022 of US$21.2 trillion and average daily volume (ADV) for the month of $1.02 trillion, an increase of 11.6 % year-over-year (YoY). For the fourth quarter of 2022, total trading volume was US$65.8 trillion and ADV was US$1.07 trillion, a decrease of 4.1% YoY.
Billy Hult, Tradeweb CEO, said, “Despite a complex backdrop of inflation, rates volatility, geopolitical risk and a strong U.S. dollar, we saw an increase of nearly 10 percent in our average daily volumes year-over-year in 2022. While rates volumes reflected these headwinds in the early part of the fourth quarter, we finished the year with a strong December across our global platform. The growth we experienced was broad-based across our markets, and reflected stronger client engagement in an array of tools and protocols including portfolio trading, request-for-quote (RFQ) and request-for-market (RFM).”
US government bond ADV was up 0.3% YoY to US$114.1 billion and European government bond ADV was up 25.5% to US$27.5 billion. Higher US retail government bond activity was offset by declines in wholesale trading, as overall industry volumes declined. Higher interest rates continued to drive volumes in the retail market. Strong European government bond trading was driven by heightened rates market volatility.
Swaps and swaptions ≥ 1-year ADV was up 13% YoY to US$186.8 billion and total rates derivatives ADV was up 19.1% to US$316.7 billion, supported by strong activity in global inflation and emerging markets swaps, with robust client adoption of the RFM protocol.
Fully electronic US credit ADV was up 29.7% YoY to US$3.6 billion and European credit ADV was up 17.7% to US$1.3 billion, both reflecting continued client adoption across Tradeweb protocols, including RFQ, Tradeweb AllTrade and portfolio trading. Tradeweb reported capturing 14.8% share of fully electronic US investment grade TRACE, and 6.7% share of fully electronic US high yield TRACE.
Municipal bonds ADV was up 141.5% YoY to US$437 million with strong municipal volumes reflecting robust institutional and retail client activity. Market volatility and elevated interest rates continued to boost volumes overall.
Credit derivatives ADV was down 6.7% YoY to US$7.9 billion as subdued credit market volatility weighed on volumes.
MarketAxess announced 27% increase in total credit ADV to US$10.6 billion in December, with a 22.8% composite corporate bond estimated market share, up from 21.4%.
That included a 26% increase in US investment grade (IG) ADV to US$5.1 billion with estimated market share of 23.4%, with estimated US IG TRACE market ADV increased 27%, while the firm also reported a 25% increase in US high yield ADV to US$1.6 billion with estimated market share of 21.4% up from 18.3%.
Emerging markets ADV of $2.1 billion was down slightly including the impact of foreign currency fluctuations with emerging markets market volumes down 22%.
Eurobonds market share was estimated at 19.6% , up from 14.4%, with US$1.4 billion in Eurobonds ADV, representing an increase of 56%; up approximately 63% excluding the impact of foreign currency fluctuations.
Municipal bond ADV with was $473 million in with an estimated market share of 5.5%.
The firm’s all-to-all trading protocol, Open Trading, saw 38% of total credit trading volume executed, up from 36% in November. The estimated price improvement via Open Trading was approximately US$79 million, and average estimated price improvement per million was $1,042.
“We delivered another strong month with a 27% increase in total credit ADV, driven by a 26% increase in US investment-grade ADV and record estimated market share across high yield, emerging markets, Eurobonds and municipals,” said Chris Concannon, president and COO of MarketAxess. “These market share gains reflect the powerful benefits of our unique all-to-all liquidity pool. The strong share gains we delivered this year reflect the increasing strength of our franchise, driven by the investments we have made to expand our product and geographic foundation. We believe that these strong results and the favourable backdrop for fixed income markets in 2023 create a very attractive operating environment for our model in the new year.”
©Markets Media Europe, 2023
