The endless pursuit of better trading
Trading is at the epicenter of the fixed income and derivatives markets. The engine that drives the rest of the floor. At Tradeweb, we’ve spent close to 15 years researching and developing the world’s finest electronic trading platforms, fine-tuning protocols and functionality to provide clients with the best possible way to transact business. When we invented the multi-dealer request-for-quote, it quickly transformed the way interest rate markets traded. Since then, we’ve expanded the range of trading functionality to include many other protocols, including click-to-trade, request-for-market, list and inventory-based trading. With over 20 marketplaces, and electronic platforms in all three Tradeweb divisions – institutional client-to-dealer, inter-dealer and retail – we offer the broadest range of trading approaches in the industry. Not only do these protocols provide clients with the flexibility of trading in the way that best suits their marketplace, but they offer other key benefits:
- Compliance. For clients who view best execution as paramount, Tradeweb delivers. We begin by digitally capturing transaction data and trade history. Our compliance reporting then gives you the tools you need to analyze trading activity in great detail with a perpetual audit trail.
- Connectivity. We work closely with the investment community to refine our trade execution services to enhance connectivity, functionality and efficiency. For example, Tradeweb's RFQ protocol lets clients simultaneously connect to multiple dealers, receive feedback and trade competitively—all in seconds.
- Flexibility. We are constantly working to create technology that streamlines trading and enables clients to adapt to changing market and regulatory conditions. The Tradeweb Viewer handles allocations with ease and accommodates a range of execution protocols and functions.
Evolution not revolution
Tradeweb is in the business of providing more efficient and effective tools for trading; we don't look to fundamentally change the way the market operates. The fixed income and derivatives over-the-counter markets have grown rapidly over the past decade. The role of the liquidity provider has made the execution of large trades possible, even though there are only a few thousand institutional investors that drive the markets. We support this growth by delivering more efficient trading tools to streamline the way business is currently done.
The protocols we offer
Tradeweb offers a broad range of trading protocols, fine-tuned for each marketplace. The evolution of these electronic markets reflects the needs of market participants. In general, the more liquid a marketplace, the more likely it is that it operates in a real-time environment. Less liquid marketplaces tend to rely on positions or orders being posted, or negotiation taking place on trading terms. Our market specialists and a large team of dedicated financial engineers work closely with both buy- and sell-side participants as we develop new electronic marketplaces. The trading protocols we use in our various institutional client-to-dealer markets include:
- Request-for-quote. The multi-dealer RFQ is the grandfather of electronic trading. Pioneered by Tradeweb in 1998, it has been deployed across all our global interest rate markets, including government bonds, mortgages and U.S. agencies. The RFQ is a fully-disclosed trading protocol; both buy-side and sell-side names are known prior to execution. It enables an institutional client to hold a real-time auction with multiple dealers and select the best price.
- Request-for-market. The RFM is a more recent protocol that provides an institutional client with the ability to request a two-sided market from a particular dealer. This mirrors the approach of a client calling a specific trader for a market. The RFM has been used to good effect in some of our newer markets, including credit default swap indices, where it is integrated with the RFQ and click-to-trade protocols on a single trading screen.
- Click-to-trade. The click-to-trade functionality enables a buy-side client to view a set of prices in real-time and click on the price and the dealer with whom they wish to execute. The trader then confirms the trade and the deal is done. This trading style is especially popular with clients that are looking to view a range of executable, real-time prices across dealers.
- Inventory-based. This protocol is most commonly deployed in less liquid markets, such as credit and some money markets. It allows the sell-side to provide a range of bids and offers for particular securities that the client can then look to execute on. These prices are not updated in real-time but provide a good indication of where the client is likely to complete the trade.
- List trading. Used by clients with multiple transactions to complete, the list trade is a highly efficient workflow tool. By executing many trades at once, clients can request prices from multiple dealers to extract the best price, and complete the hedging of the trades at one time, saving on significant manual effort compared to executing on the telephone. List trading is especially popular in the credit markets.
While these trading protocols represent the majority of transactions that are executed on Tradeweb, there are many different variations within the individual marketplaces. Tradeweb is always looking to extend the range of trading styles available, where it makes sense for the end-user.