Electronic trading platforms are reporting another month of double figure volume growth in fixed income markets, with Tradeweb overtaking MarketAxess in US investment grade credit for the first time.
Tradeweb reported US investment grade (IG) average daily volume (ADV) more than doubled YoY (104%), hitting US$7.3 billion, while high yield ADV reached US$759 million, an increase of 44% YoY (April 2023: US$529 million).
Tradeweb CEO Billy Hult said, “It’s been ten years since Tradeweb launched electronic trading in credit and I’m super proud of how far we’ve come. While we were already a leading platform for rates trading at that time, we were essentially starting from zero in credit and those early days were not fun. A decade later we are a leader in the space and growing, a reminder that strong competition spurs innovation and keeps markets moving forward.”
On the firm’s Q1 earnings call with analysts, Hult had noted credit market share was a “highlight”.
US government bond ADV was up 70.7% year-on-year (YoY) to US$205.3 billion, while the the firm reported European government bond ADV was up 23.9% YoY to US$45.6 billion while mortgage ADV was up 34.8% YoY to US$206.1 billion.
Fully electronic US credit ADV was up 96.1% YoY to US$8 billion and European credit ADV was up 19.4% YoY to US$2.3 billion.
Tradeweb said higher US credit volumes were driven by increased client adoption, most notably in request-for-quote (RFQ), portfolio trading and Tradeweb AllTrade.
Municipal bonds ADV was up 20.8% YoY to US$347 million. The firm said these volumes “outpaced” the broader market, which was up 6% YoY. Credit derivatives ADV was up 65% YoY to US$15.3 billion
At MarketAxess, the firm’s total ADV in April reached US$34.1 billion, up 22.6% YoY. This was based on a “strong rebound” in total rates trading ADV, up 31.3% YoY, and “strong growth” in total credit ADV which hit US$13.9 billion, up 11.9% YoY.
US high grade ADV stood at US$6.6 billion, up 16.4% (April 2023: US$5.7bn) and driven by a 39.6% increase in estimated market ADV.
The increase in market volumes was driven by an 81% increase in portfolio trading and dealer-to-dealer trading volume in April, MarketAxess said, which represented approximately 62% of the growth in the market year-over-year.
Chris Concannon, CEO of MarketAxess, said, “In April, we delivered strong growth in credit ADV of 11.9%, driven by a 16.4% increase in US high-grade on stronger market volumes, a 31.7% increase in emerging markets, and a 13.3% increase in municipal bonds. US high yield ADV stood at US$1.4 billion, down 1.2%.
“We were pleased that credit spread volatility increased in the back-half of April, which drove an increase in hedge fund client activity, resulting in higher levels of U.S. high-yield estimated market share relative to recent trends. In April, approximately 57% of our portfolio trading volume was executed on X-Pro, as we continue the roll-out to our largest clients,” Concannon added.
Elsewhere, emerging markets ADV reached US$3.4 billion, up 31.7% YoY. The year-over-year increase was due to a 29.1% YoY increase in hard currency trading ADV and record local currency markets ADV, up 53.5% YoY.
Eurobonds ADV hit US$2 billion, down 13% YoY. Municipal bond ADV hit US$444 million, up 13.3% YoY, with estimated market ADV up 1.7% YoY compared to the prior year.
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