The evolution taking place in fixed income markets has laid the foundation for the recent growth in credit index futures, positioning 2025 as a pivotal year for further proliferation of the product and broad adoption by the market. Advancements we’ve seen in market infrastructure, such as the electronification of trading, real-time bond and ‘liquid’ index pricing, as well as enhanced analytics on Terminal to compute fair value and identify relative value opportunities, have transformed how buy-side firms are managing and trading credit risk. These trends will continue, enabling greater price transparency and standardisation of this market which, historically, aids in the development of exchange traded products like credit index futures. 

The existing contracts provide broad-based exposure to the European, US and emerging market corporate bond markets utilising Bloomberg’s fixed income benchmarks. In 2025, we envision an expansion of this global credit futures complex, allowing investors to target regional credit markets and specific risks such as duration, sectors, or credit quality, providing a more diverse range of tools for those seeking local exposure and precision. This will lead to increased cross-margining opportunities with correlated products, amplifying the utility and cost-effectiveness of the product. 

For global credit, we enter a year of uncertainty in 2025, with resilient corporate fundamentals and potential easing of monetary policy offset by ongoing geopolitical tensions. Investors will continue to find value in a flexible credit vehicle that can be used to deploy capital quickly, express a tactical view or hedge corporate credit exposures. The product will continue to attract a diverse range of market participants, from asset managers to insurers, looking for narrow bid-ask spreads and tight tracking to the benchmark. We expect further normalisation of credit index futures as a core instrument in credit markets.

Charlie Campbell-Johnston, head of automation, international, Tradeweb 

The last few years have thrown fixed income traders one curveball after the other, and automation has proven itself as an effective tool to deliver scalability and time efficiency across different products and through a range of trading protocols. On the other hand, systematic and cross-asset funds have used automation to create new trading activity and realise new strategies. 

The game, however, could change in 2025. A combination of technological innovation and high-quality data would enable traders to adapt their automation parameters to actual real-time market scenarios, giving them even more control over the trade execution process. After all, automation has already transcended its operational efficiency origins and this evolution would cement its hard-earned place at the core of a dynamic and innovative execution desk. 

Tucker Dona, head of business development, Baton Systems 

We are one-year away from the mandatory central clearing of US Treasuries, which is going to have a material impact on the way that firms post margin for this product. Firms wanting to offset the impact of higher margins need to spend 2025 making operational changes and upgrades to optimise their systems for trading and clearing US Treasuries. However, there is still more clarity needed on which CCPs market participants will choose to clear these products, and which model participants will use, such as sponsored or done-away. Thankfully, much of the operational preparation and workload can be done efficiently with support from vendors providing direct connectivity into the CCPs.

If firms are not able to efficiently optimise and mobilise available assets across the range of CCPs they will use for clearing US Treasuries, they are going to face operational and cost challenges. By using data-driven insights to select the most eligible and opportunistic collateral for the different clearing venues and then being able to execute all movement instructions, firms can manage the higher margin levels more effectively. They will also be able to reduce associated costs, and more efficiently manage better their collateral usage and its impact on available liquidity. 

The post The TRADE predictions series 2025: What to expect in fixed income appeared first on The TRADE.

Both are set to begin their roles in January 2025 and report to Billy Hult, Tradeweb’s chief executive. 

Bruni was previously managing director, head of Europe and Asia business at Tradeweb, while Dixon joins from Hollis Park Partners having founded the firm and most recently worked as chief investment officer. 

Bruni’s new role, and the addition of Dixon, reflect the company’s global expansion, said Hult. 

“In recent years, Tradeweb has experienced substantial growth driven by accelerated adoption of electronic trading, entry into new markets and channels, and selected acquisitions. To ensure we are best managing the business today and taking advantage of ongoing strategic opportunities, we are delighted that Enrico will further expand his role, and that Troy will join our management team to co-lead our global markets business. 

Read more: Fireside Friday with… Tradeweb’s Enrico Bruni

Specifically, Bruni and Dixon will be jointly responsible for overseeing Tradeweb’s global markets strategy – seeking growth opportunities across products, geographies and the four client channels.

Dixon is currently a member of the Tradeweb board and will step down from this position on 31 December, prior to beginning his role as co-head of markets.

“Enrico and Troy’s highly complementary experience, respective track records, and deep expertise ideally position them to enhance Tradeweb’s broad offerings globally. I look forward to our ongoing work together to maximise Tradeweb’s potential now and into the future,” said Hult.

The post Tradeweb appoints global markets co-heads amid ‘substantial’ recent growth appeared first on The TRADE.

Enrico Bruni

Specifically, the link will be between Tradeweb and TSE’s RFQ platform CONNEQTOR. 

According to the businesses, this will “allow Tradeweb buy-side clients to include CONNEQTOR liquidity providers when launching a trade enquiry on the Tradeweb Japan-listed ETF marketplace”. 

Enrico Bruni, head of Europe and Asia business at Tradeweb, said: “This exciting collaboration between Tradeweb and TSE’s CONNEQTOR platform demonstrates our focus on linking liquidity pools for the benefit of institutional investors looking to transfer risk with a higher degree of certainty. 

“We are in the business of enhancing clients’ execution experience, and we look forward to bringing more time and cost efficiencies to investors trading Japanese ETFs, both locally and globally.”

The first transaction on new connectivity has already taken place with Global X Japan having been the first to execute.

Through the direct link, clients can submit orders from the Tradeweb user interface to CONNEQTOR’s list of market makers as well as to Tradeweb’s network of liquidity providers. 

Transactions with CONNEQTOR market makers will be cleared and settled through the post-trade infrastructure of TSE.

“CONNEQTOR has been developed as a platform to enable investors to trade ETFs ‘faster and cheaper’. We hope that the new connection with Tradeweb will promote investment in the Japanese market by allowing investors outside Japan, who have had difficulty using CONNEQTOR, to easily access ETFs listed on the Tokyo Stock Exchange from overseas,” added Moriyuki Iwanaga, president of Tokyo Stock Exchange.

“TSE will continue to strive to provide and develop a highly convenient market environment, where investors can enjoy better prices and smoother execution.”

The post Tradeweb and Tokyo Stock Exchange unveil plan to expand liquidity in Japanese ETFs appeared first on The TRADE.

Lisa Schirf

Launched 40 years ago, The WGBI measures the performance of fixed-rate, local currency, investment-grade bonds and comprises sovereign debt from over 25 countries, denominated in a variety of currencies. 

Tradeweb FTSE Closing Prices are expected be included in March 2025.

“The World Government Bond Index is FTSE’s flagship global index and a leading global benchmark for fixed income markets,” said Lisa Schirf, global head of data and analytics at Tradeweb.

“The inclusion of Tradeweb’s benchmark closing prices in FTSE’s indices validates our continued commitment to develop the next generation of fixed income pricing and index trading products for traders and investors worldwide.”

These benchmark prices can be used in index construction, as well as reference rates for a broad range of use cases, including trade-at-close transactions and derivatives contracts.

In addition to providing benchmark closing prices, Tradeweb stated that it plans to bolster electronic trading functionality for FTSE Russell fixed income indices and customised baskets.

For clients seeking to efficiently express a view on FTSE Russell indices and baskets, Tradeweb added that providing enhanced trading functionality can help efficiently manage what are often their largest and most critical trades.

“We’re pleased to announce the price source change within our global fixed income indices to include Tradeweb FTSE closing prices for these significant global rates markets,” said Scott Harman, head of fixed income, currencies and commodities at FTSE Russell.

“It ensures our indices continue to incorporate transparent, representative data sets across the diverse universe of fixed income markets that they track. Additionally, FTSE Russell’s benchmark administration of these prices brings a new level of transparency and rigorousness to the valuation of fixed income markets and our indices.”

The post World Government Bond Index to include Tradeweb FTSE benchmark closing prices appeared first on The TRADE.

Lisa Schirf

As seen with existing Tradeweb FTSE closing prices for UK gilts and European government bonds, the new US Treasury closing prices will incorporate trading activity from Tradeweb’s electronic platform, which the firm claims to result in more robust benchmark pricing.

The new closing prices facilitate the calculation of bid and offer prices, capturing transaction costs based on executable pricing quotes collected via the Tradeweb platform. This builds on top of mid prices, which are produced for all asset classes.

The pricing data set features coverage of various of security types including US Treasury notes and bonds, bills, strips and Treasury Inflation-Protected Securities (TIPS), with both a 15:00 and 16:00 New York snap time.

“As we continue to expand Tradeweb’s collaboration with FTSE Russell, our clients gain access to a broader set of benchmarks for use as reliable closing prices in their investment process and end-of-day trading strategies and other purposes,” said Lisa Schirf, global head of data and analytics at Tradeweb.

“We believe the Tradeweb FTSE US Treasury closing prices will serve as a unique foundation for the global fixed income markets and their launch further demonstrates our commitment to the electronification of the markets.”

The extension of closing pricing to the US Treasury market will help expand benchmark pricing capabilities across a range of fixed income securities. Namely, USB-denominated credit securities will be included, which are largely underpinned by US Treasury valuations.

The new methodology is expected to be incorporation into UK gilt and Euro government closing prices, including the addition of bid and offer prices.

 “The launch of Tradeweb FTSE benchmark pricing for the US Treasury markets, represents significant progress in realising our ambition to offer the financial markets a better, more representative solution for valuing fixed income securities,” said Scott Harman, head of FICC indices at FTSE Russell.

“We recognise the criticality of the US Treasury markets to the investment ecosystem, and the need to continue to offer innovative benchmark solutions to our clients for this important asset class.”

The post Tradeweb and FTSE Russell launch combined US Treasury closing prices appeared first on The TRADE.

Nicola Danese

Higher money market volatility as a result of revised expectations of central bank policy actions has led traders to increasingly reference spreads to overnight index swap (OIC) curves when evaluating pricing of fixed-rate repos.

Tradeweb claims to be the first electronic trading platform to make OIS curves available during the repo trade negotiation process, which will enable institutional clients to better assess the price competitiveness of different repo rates across different currencies and maturities.

“By linking our repo and swaps platforms, we are transforming what used to be manual, disconnected and time-consuming processes into efficient, time- and cost-effective digital workflows,” said Nicola Danese, co-head of international developed markets at Tradeweb. 

The OIS spreads are generated for all GBP, EUR and USD trades on Tradeweb’s repo platform, which will reflect the exact term of each repo trade, leveraging off swap curves on the IRS platform.

Following the execution of a long-dated fixed-rate repo transaction on Tradeweb, buy-side traders will also be able to manage their interest rate exposure in a fully electronic workflow, essentially helping to achieve straight-through processing alongside reducing operational risk.

Trades are able to pre-populate a corresponding OIS ticket with the details of their completed repo trade, including start and end date, direction and cash amount, and send a request-for-quote enquiry to liquidity providers on Tradeweb’s IRS platform.

“In today’s active rates environment, Tradeweb provides us with essential information for executing a fixed-rate repo transaction,” said Nick Sheffield, portfolio manager in the Money Markets team at Insight Investment.

“We seek out technology that can help enhance investment outcomes for clients and welcome innovations that support speed of decision-making and execution processes.”

The post Tradeweb links repo and interest rate swap platforms to enhance institutional decision making appeared first on The TRADE.

Billy Hult

The purchase price for the acquisition of ICD – an institutional investment technology provider for corporate treasury organisations trading short-term investments – is expected to be funded with cash on hand and close in H2 2024 subject to customary adjustments and a regulatory review.

Billy Hult, chief executive of Tradeweb, said: “ICD is an exceptional opportunity to acquire a leading investment platform for corporate treasurers, a fast-growing channel within fixed income markets and a strong strategic fit for Tradeweb.

“Acquiring ICD will further diversify our client and business mix, advancing our track record of expanding into adjacent markets to improve client workflows. As part of Tradeweb, ICD will also be positioned to drive the adoption of electronic trading for corporate treasurers.” 

ICD – one of the US’ largest institutional money market fund portals – currently provides its services to more than 500 corporate treasury organisations from growth and blue-chip companies across 65 industries and over 45 countries, allowing customers to invest in money market funds and other short-term products to manage liquidity. 

Following acquisition by Tradeweb, ICD is set to provide a comprehensive solution for corporate treasurers and asset managers worldwide “to manage short-term liquidity needs and FX risk, as well as optimise yield and duration via Tradeweb’s existing suite of products”. 

ICD’s products include ICD Portal and ICD Portfolio Analytics. The former is a one-stop shop for researching, trading, analysing, and reporting on investments, while the latter is an AI-driven cloud solution which is used to aggregate positions across a corporate treasury’s portfolio for analysis and reporting.

Tory Hazard, chief executive of ICD, said: “This acquisition will enable ICD clients to have integrated access to Tradeweb’s fixed income marketplace, while continuing to trade through our existing technology.

“The combined offering delivers even more of what corporate treasury wants, and together, we will be able to unlock the full potential of our technology.”  

Following close of the transaction, Hazard will report to Tradeweb president Thomas Pluta and join Tradeweb’s Operating Committee.

The post Tradeweb set to acquire Institutional Cash Distributors in $785 million cash deal appeared first on The TRADE.

As part of the deal, the fixed income platform provider will provide ETPs for the central bank and other Eurosystem National Central Banks (NCBs).

Billy Hult

The term of the contracts is four years with the option to extend twice for an additional two years.

Tradeweb’s ETPs will cover the trading of EUR-denominated bonds, US Treasuries, Japanese government bonds, USD- and EUR-denominated supranationals, sovereign and agency bonds and USD- and JPY-denominated interest rate swaps.

The news follows a similar win by Tradeweb in 2015 where it also secured the tender to supply ETPs to the central bank following a bid process.

“We are grateful for the opportunity to provide trading services and solutions to the European Central Bank for another term,” said Tradeweb Markets chief executive Billy Hult.

“We remain focused on continuing to collaborate with the ECB, while enhancing the trading experience for central bank and sovereign wealth fund clients across our platform.”

More to follow…

The post Tradeweb wins bid to supply electronic trading platforms to European Central Bank appeared first on The TRADE.

For those of you that haven’t heard of it, RFM is a not-so-distant cousin of the request for quote protocol (RFQ). RFQ has cemented itself as a central method of execution in fixed income in recent years in light of the advent of electronic trading and the move away from bilateral voice trading and onto platforms.

RFM is a similar concept, also derived from a desire from investors to access as much available liquidity as possible to ensure order fills and achieve best execution. It too is a trading protocol used by traders to gauge interest from several dealers in the market at a time to achieve efficient execution of an instrument.

However, the key difference with RFM is that when using the protocol, a firm will ask for both the pay and receive price for an instrument. The bottom line being that it reduces market impact by showing two-way interest in a chosen instrument to hide a firm’s direction.

“As buy-side traders seek liquidity in larger size trades, the challenge to retain as much information as possible – while at the same time obtaining an executable price – can be difficult to navigate,” State Street Global Advisors’ head of fixed income trading, Sharon Ruffles, tells The TRADE. “As the fixed income market moves towards ever more electronification, RFM allows for price discovery with less information slippage.”

The two-way workflow is no new phenomenon to trading and is used in the execution of several other asset classes. Given the importance of market impact in fixed income, it therefore makes sense that the RFM protocol has seen a rise in popularity in the last year, particularly in the swaps markets, as a natural progression of the market alongside increased electronification. While not everybody is using it, it is growing.

As traders have increasingly begun to adopt algorithms in their execution workflows in fixed income, which are data hungry and protocol agnostic, this too has boosted the use of RFM.

According to fixed income platform provider Tradeweb, the trading protocol has grown from 19% in Q4 2022 in net risk terms, up to 34% in Q4 of last year. Looking specifically at G3 currencies [Euro, Dollar, Sterling] in the rates market, that growth story from 2022 to 2023 was from 17% to 32% – more than doubling in a year.

“Our functionality relies on dealer support for the liquidity to happen on the platform and dealer support really started to grow at the end of 2019,” Tradeweb’s head of European interest rate derivatives, Angus McDiarmid tells The TRADE. “It’s a growing interest for us on the euro government bond side. Whereas the government bond business has historically been very much an RFQ market.”

Market impact

When exploring why demand for this not-so-new protocol to the fixed income scene has soared in recent years, the same phrase is brought up every time: it reduces market impact.

“RFM was worth pushing for a larger in size trade to limit impact and limit dealers from being able to skew price based on knowing their direction,” explains McDiarmid.

Reducing market impact is central to the growth of RFM. One key client user group of the protocol is the hedge fund segment, and it goes without saying that hedge funds are some of the most impact conscious firms out there.

Many of these firms opt for two-way pricing to shroud their market direction and recent regulatory changes have driven a chunk of hedge fund flow that might’ve taken place bilaterally, on-platform. For example, thanks to Mifid and the push to broaden the scope of what should take place on venue, Sonia and Sofr swaps flow that might’ve previously taken place bilaterally now takes place on venue.

Tradeweb subsequently rolled out trading protocols for clients to engage with the Sofr alternative benchmark for US dollar derivatives and €STR for euro derivatives. Traders can use request for quote or request for market protocols and can upload Ibor portfolios into Tradeweb’s list trading mechanism for conversion into risk free rates.

Elsewhere, in emerging markets, where liquidity is thinner and any kind of inclination to trade is likely to be preyed upon, traders here have also typically favoured a two-way model both using voice and now, electronically. The result: a boom in RFM. At Tradeweb, around 67-68% of volume on its emerging markets platform was accounted for by RFM in Q4 of last year. 

“For dealers it very much replicates an existing voice workflow that they have been doing nigh on decades,” Tradeweb’s global chief operations officer for emerging markets, Will Tarr, tells The TRADE.

“That ability to conceal the direction you’re trading pre-trade and then only reveal it to a couple of participants post-trade gives clients a much greater degree of comfort trading that electronically.”

Tradeweb and the London Stock Exchange Group’s (LSEG) FXall launched a new FX swap workflow solution for local currency emerging markets in August last year. The solution links trading workflows in local currency EM bonds and FX swaps through a single user interface (UI). Using the solution, mutual clients of the pair can buy or sell an emerging markets bond via Tradeweb’s RFQ or RFM protocols.

Tradeweb is now working on building out its RFM offering in emerging cash markets in local currencies.

Using an RFM protocol also contributes, Tarr confirms, to better calculation of the mid-price in emerging markets trading rather than look at a static curve. Something that also translates into the rates space as well.

“When you’re asking for one side of that PV [present value] market, you have to calculate how much you’re being charged, what’s the real mid, is the trade PV accurate? It might be in an area of the curve where there’s not a lot of liquidity and granularity and you want to look at a truer TCA,” explains McDiarmid.

“It’s much easier to do that when you put two or three dealers in competition and it makes it much cleaner to assess the real mid of that trade at that time for that size of trade when you have two-way pricing.”

All of this points to RFM as a natural next step in the development of electronic workflows in fixed income. Dealers are becoming increasingly confident quoting two way on platform, McDiarmid confirms, and some of this is driven by transferable behaviour from trading in other asset classes.

“They can still show an axe and skew that price to a direction they want to trade but they’re showing an honest two way at time of execution for that specific size. I’m happy to pay here and I’m happy to receive that,” he says.

“A really good example of that [transferable behaviour] is where we trade swaps versus bonds in non-contingent asset swaps. Clients have questioned, understandably, why they can ask for a two-way price on the swap leg and have to show their direction on the bond leg? It’s about that consistency.”

Rates vs credit

However, when looking at other potential use cases for the RFM protocol, there remains some areas whereby alerting several dealers of your interest – using two-way pricing or not – could prove to be harmful for the buy-side. While the RFM protocol is having an undeniable rise to fame in the rates space, whether it will see the same adoption in credit is another story all together.

Read more – Tradeweb and LSEG’s FXall launch new emerging markets FX swap workflow solution

Many have suggested that the natural next step, following this sudden interest from the street in rates, is for RFM to expand further into other corners of the fixed income sphere, creeping into credit when used correctly. Here is where the use cases of the protocol and its usefulness in reducing market impact become more difficult to justify.

“There is absolutely a place for RFM in fixed income, particularly in local markets, but I think it must be considered carefully what the best execution method is for a particular bond as often the market dynamics or inventory and liquidity of the line don’t result in RFM being the optimal protocol to use,” explains head of European FICC trading Manulife Investment Management, Peter Welsby.

In some markets, regardless of whether or not you’re showing a two-way direction, thanks to the liquidity landscape, it becomes easy to work out a firm’s intentions. This renders a protocol like RFM potentially harmful to execution in some cases. And, makes it extremely important to pick and choose when you use protocols.

“Whilst in smaller sizes it might not make much of a difference, for larger-sized credit trades quoting a multitude of banks, using RFM is likely to worsen the pricing received,” Welsby explains.

“The client may think that they’ve hidden their direction, but often in credit it can be quite predictable which direction the client is. As such, rather than using RFQ with select liquidity providers with strong relationships and market presence to minimise information leakage, the client has shown their full size to a whole host of dealers. This could negatively impact the winner of the trade and evidently won’t result in better pricing in the long run.”

Given inventory restrictions in credit, it’s often more challenging for a broker/bank to make a two-way price if they don’t have the bond to begin with. In credit, it’s also harder to source bonds from smaller issuances than in the local markets and because of that dealers are more reluctant to reveal their hand without a strong relationship with the buy-side client.

“We would consider using the RFM protocol for trades that are normal market size and where the market is deep and liquid,” adds Ruffles. “Market makers will be less sensitive to the direction of the trade and potential for information slippage, and so they are likely to be more comfortable making a tight two-way price.”

RFM has seen a rapid rise in demand in the rates markets in recent months. And this shows no signs of abating given the expected central bank activity throughout the course of this year and the predicted movement in the money markets.

While some macroeconomic factors such as reduced central bank balance sheet could cause a reduction in liquidity that could see a move toward more bilateral trading to protect market impact, RFM is undoubtedly set to continue to grow.

Whether or not it ever becomes applicable to more inventory-driven markets is another question with a less positive answer.

The post Smoke and mirrors: The growth of two-way pricing in fixed income appeared first on The TRADE.

The integration of Tradeweb’s intraday evaluative bond prices will help better inform users’ trading decisions alongside unlocking new trading workflows for users of the Investortools Delear Network.

Tradeweb Ai-Price utilises proprietary machine learning and data science together with MSRB and Tradeweb proprietary data to price an estimated one million municipal bonds at or near traded prices both intraday and end of day with closing prices – addressing the challenge of price discovery.

These prices are now accessible on the Inverstortools Dealer Network, with updates made throughout the day.

“As the municipal bond market embraces more electronification and transparency, gaining access to quality intraday and end-of-day closing prices has never been more important,” said Lisa Schirf, global head of data and analytics at Tradeweb.

“By utilising Tradeweb Ai-Price for municipal bonds, users of the Investortools Dealer Network can optimise their trading experience through enhanced price discovery.”

Access to intraday pricing information via Tradeweb Ai-Price for municipal bonds will offer traders necessary data when making trading decisions.

The development follows fixed income trading venue and data provider MarketAxess expanding its integration with the Investortools platform for its municipal bond activity in June last year.

Read more: MarketAxess and Investortools partner on municipal bond offering

“Reliable intra-day pricing is an essential component of trade automation workflows and will allow our users to stay at the cutting edge of a rapidly evolving fixed-income marketplace,” said James Morris, senior vice president at Investortools.

The post Investortools Dealer Network integrates Tradeweb Ai-Price for municipal bonds appeared first on The TRADE.