Tradeweb Discusses the Electronification of Trading

“IPO was the right decision, the electronification of trading will continue", Lee Olesky, Tradeweb Markets

By Börsen-Zeitung, 8 November 2019

Lee Olesky is optimistic about the future of Tradeweb: the CEO of the trading platform operator that went public in April thinks that the electronification will continue to advance in the coming years. 


Mr. Olesky, your company carried out an IPO in April.
What made you decide to go public?

I have been with the company since the 1990s. After significant growth, it had reached a size where the IPO was the right decision. We want to maintain our growth strategy. The basic factors of our business are technology, our clients, and our employees. We need a currency to reward and keep our best employees. Particularly in a technology-driven business like ours, it is increasingly important to attract and retain talent. We are globally positioned, with a headcount of about 1,000. The daily trading volumes on our platforms are in excess of USD 700 billion.

What are the priorities of your growth strategy?

Trading automation is of crucial relevance with the goal of increased efficiency, as is the automation of related activities in the workflow area. Basically, our business consists of providing the trading community with software. The markets we navigate are huge, with an addressable trading volume of USD 6.5 trillion per day. A large part runs on low levels of automation and without significant electronic linkage. We now use our technologies to advance market automation and thus our own growth.

What do you consider the biggest growth drivers in your industry?

Technology is one aspect, as mentioned earlier. Other ones are the competition among market participants, which drives innovation and change. The regulatory framework is also important, given that this is a highly regulated business. It is the catalyst for much of what happens. Mifid II, for example, has triggered a move away from telephone trading to electronic, regulated trading platforms – similar to what happened in the United States after the financial crisis. Case in point: the Dodd-Frank Act requires over-the-counter derivatives to be traded via swap execution facilities.

Does the move towards regulated trading platforms translate into significant growth potential for you?

Absolutely. The electronification of trading will continue. Depending on the region and segment, electronic trading accounts for 30 to 50% of our markets at the moment. This percentage is set to grow further. At some point, pretty much everything we do will be digital. Eventually, the market share will hit 100%. The question is not whether this will happen, but how and when. Also, development does not stop once a market has gone fully digital – there are further changes up the road. The concept is similar to the development of the mobile phone through applications and the way we use it. The market participants’ goal is to find a buyer/seller as economically and efficiently as possible. That is the competitive environment we are in.

Your industry is still subject to consolidation. Could you imagine that one day somebody might issue a takeover bid for your company?

The process of becoming a listed company is now complete. More people know now what we do, and our brand has gained visibility. We are transparent, and our figures are publicly available. Our share is very attractive, the market capitalisation has increased since the IPO. We have hundreds of investors. Our results have experienced double-digit growth for years.

What growth potential do you expect for the different regions in which you operate?

The U.S. accounts for the lion’s share of our business, but our international operations have experienced high growth rates, with a current share of 36% of our total revenues. Our development has been strong both in Europe and Asia. In 2017, we were the first company in the industry to facilitate access to the Chinese bond market for global investors through our Bond Connect initiative.

Mr. Olesky was interviewed by Christopher Kalbhenn.

Lee Olesky - Engineer of platforms

CK: Lee Olesky is one of the best-known engineers of electronic bond trading platforms worldwide. He has contributed significantly to the creation of several such platforms. He was one of the co-founders of Tradeweb Markets in 1996 and one of the co-founders of Brokertec in 1999. In the same year, he left Tradeweb and became the first CEO of Brokertec. After its sale to Icap, he returned to Tradeweb and was appointed CEO in 2008. An important acquisition under his leadership was the takeover of BondDesk in 2013. In April 2019, he was at the helm of the company when Tradeweb went public. For investors, subscription to the IPO has turned into a good deal: since the IPO, the share price has increased from USD 27 to more than USD 40.

(Börsen-Zeitung, 8 November 2019)