OTC trading platform of the year: Tradeweb

The tumult spawned by Covid-19 showcased the value of the market infrastructure provided by Tradeweb. The firm helped its clients to seamlessly adjust their workflow and orders remotely, as many of their staff have had to work from home during the pandemic. The combination of comprehensive, real-time data, innovative functionality in e-trading and digital processing of those trades enabled Tradeweb to secure this year’s best over-the-counter trading platform award.

Tradeweb has clearly benefited from the rise of electronic trading in recent years – a trend that has been further deepened by the Covid-19 crisis, which forced traders to stay away from the office.

“[The pandemic] acted as a catalyst, but the digitisation trend [has been] slower to catch on in Asia … than in Europe or the US. That necessitated the move towards new practices of working environments away from the office, from home or elsewhere, which in turn necessitated e-trading,” says Li Renn Tsai, Tradeweb’s head of product and sales for Asia in Singapore.

Our track record has shown we have been successful implementing, adapting and strengthening our platform and our network to any new regulatory regime and for all stakeholders

Li Renn Tsai, Tradeweb

As a result, Tradeweb reported record trading volumes across its global marketplaces in the first quarter of this year, registering an average of over $1 trillion per day and $65 trillion in total notional volumes.

While this rise in trading might have, to a large extent, been driven by sudden market events and resulting client needs, Tradeweb has also been able to demonstrate its commitment to customers. As the pandemic took hold, institutional investors in Asia were able to use its platform to meet their liquidity needs at a time when this mattered most.

Tradeweb’s distinctive philosophy of offering multiple asset classes and trading mechanisms also paid off. Being able to trade derivatives, bonds and equities in the same place, while using similar tools and processes, helped clients remove unnecessary complexity from their workflows. Innovations within its automated execution platform AiEX and portfolio trading also helped give Tradeweb the edge over its peers.

Heterogeneity

While Asia is one of the world’s fastest-growing regions, it is also highly diverse and fragmented – and this brings its own set of challenges. This fragmentation extends to different regulatory requirements, which can be cumbersome compared with the ease of doing business in jurisdictions with one coherent set of rules, such as the US or the European Union.

“We talk to local regulators frequently, and part of the discussion [to shape policy] is how to deploy technology to help investors adjust to new rules. Unlike Europe, where different financial centres compete with each other within one primary regulatory framework, Asia does not enjoy the same cohesion, but has made tangible efforts to reduce fragmentation, particularly in recent years,” says Andrea Sbalchiero, Tradeweb’s interest rate swaps product manager for Asia.

Tsai stresses how crucial it is, especially this year, for all Tradeweb offices and teams to offer customers the same underlying technology and protocols, so as to provide seamless service during times of crisis, such as with the pandemic.

Tradeweb entered the Asia market in 2005, when it opened its Tokyo office, principally to facilitate the electronic execution of global products to customers across the region. Once it had a better understanding of its Asian clientele, it then started to offer more market-specific products and solutions that additionally complied with global and regional legal and regulatory requirements. Today, it also has operations in Hong Kong, Singapore and Shanghai.

“Our track record has shown we have been successful implementing, adapting and strengthening our platform and our network to any new regulatory regime and for all stakeholders,” says Tsai.

E-trading and the future

Given such regional fragmentation, Tsai maintains that e-trading is crucial for bringing Asia and the world together.

“Elsewhere in Asia, the [adoption of e-trading] is getting there, but has been quite slow. Yet, asset management is trying to become more efficient, and automation can help with that, when one considers achieving more throughflow faster with the same number of traders,” says Tsai.

[Tradeweb] are doing great, and whenever I need support, they are there for me. The platform suits my needs

Philip Wong, Shanghai Pudong Development Bank

The net result seems to be that Tradeweb’s customers are satisfied. The firm’s derivatives marketplace has been going from strength to strength, constantly adding new currencies and tools. Emerging-markets interest rate swaps were a big area of focus, and Tradeweb saw higher volumes and increasing demand for new streams of liquidity and diversification from clients.

China and its bond market are also a big opportunity area for Tradeweb, particularly when it comes to real-money accounts. The firm believes that by digitising traders’ execution experience in Chinese onshore bonds, it can further spur foreign investor inflows in the market. This is why it has partnered with the China Foreign Exchange Trade System (CFETS) – part of China’s central bank – to offer fully electronic access to both Bond Connect and China Interbank Bond Market (CIBM) Direct northbound channels.

“We mainly use Tradeweb to execute CNY bonds for Bond Connect trades,” says Philip Wong, Shanghai Pudong Development Bank’s head of Ficc in Hong Kong.

“[Tradeweb] are doing great, and whenever I need support, they are there for me. The platform suits my needs.”