Dealer Diversity in the Spotlight
This article originially appeared in The Desk here.
The financial services industry has made enormous progress toward recognizing the importance of diversity over the last several years, but there is still a great deal of work to be done. While the marketplace and regulators alike have undertaken efforts to expand diversity, equity and inclusion (DE&I) programs and initiatives such as new diversity policies and practices, improved workforce data and transparency, and industry-wide efforts on improved disclosure, it is still early days and challenges to meaningful progress remain.
Tradeweb built an innovative and thoughtful solution that addressed a growing need in the marketplace and introduced its Spotlight Dealer Diversity Program (Spotlight Program), this past June. Designed to promote Tradeweb’s diverse dealers on the platform, the program supports the advancement of this community through a combination of individual firm profiles, direct consultation and promotional programs created to bring more visibility to these diverse dealers operating in electronic markets.
In addition, Tradeweb enhanced its request-for-quote (RFQ) trading workflow to more prominently expose diverse dealer liquidity to Tradeweb’s participating buy-side clients, further strengthening engagement between the two groups on the platform. This functionality launched for U.S. Credit users but the Spotlight Dealer Program will ultimately expand to additional asset classes with new functionality introduced for other securities as needed.
In announcing the program, Tradeweb President and CEO-elect Billy Hult, said: “If we’re going to affect meaningful, long-term change, we need to look hard at the underlying systems and processes that drive our financial markets and make sure diverse dealers can leverage electronic trading in a meaningful way. With our Spotlight Program, we’ve worked closely with the industry to create a holistic solution that promotes greater diversity and inclusivity among market participants.”
By making enhancements to its RFQ protocol that increase visibility for liquidity providers owned by women, veterans, individuals with disabilities and members of underrepresented racial and ethnic groups, Tradeweb is drawing on the power of its vast client network to facilitate efficient trading with these diverse firms from within the institutional trading workflow. This was important criteria, both for Tradeweb and for members of its buy-side and dealer communities, with whom the functionality was developed, tested and refined over the course of a year leading up to the launch.
“By finding ways to promote diversity in the trading workflow, the Spotlight Program captures both the human and technical sides of the equation to level the playing field in a practical, meaningful way,” said Samuel A. Ramirez, Jr., Senior Managing Director at Samuel A. Ramirez & Co., a Tradeweb partner for over 25 years and member of the Spotlight Program.
The program allows participating dealers to be involved directly or indirectly in RFQ trades initiated by the buy-side using the Spotlight protocol. A buy-side trader can enable the Spotlight enhancement within their RFQ ticket and select a specific Spotlight Dealer for which they are enabled for disclosed trading on Tradeweb’s U.S. Credit platform. Once a Spotlight Dealer is chosen, and the RFQ is sent, it simultaneously goes disclosed to the chosen Spotlight Dealer and anonymous to the Tradeweb AllTrade® network.
The chosen Spotlight Dealer will have the option to respond directly to the Buy-Side client on the RFQ, but does not have to. Responses will come back and the trade will be executed at the best price. If best level is an anonymous AllTrade A2A response, the selected Spotlight Dealer will intermediate the trade. If the best level is from the Spotlight Dealer, then the trade executes directly with the Spotlight Dealer.
Either way, the selected Spotlight Dealer is uniquely and always a disclosed participant in the trade and has full transparency on the RFQ from the moment the inquiry is initiated using the U.S. Credit Protocol.
“By introducing the Spotlight Program, we can immediately address the marketplace awareness and visibility challenges that confront diverse dealers operating in fixed income markets by directly plugging them into our extensive ecosystem so they too can benefit from that network effect,” explained Tradeweb’s Head of U.S. Institutional Fixed Income Chris Bruner.
In addition, Tradeweb continues working with our Spotlight dealers to further enhance their relationships with buy-side counterparties and improve efficiencies in upstream workflow through access to new tools and systems which help facilitate their business goals. To date, fifteen dealers have signed on to the Spotlight Program and we are actively discussing the initiative with several new diverse dealers that have recently joined the platform. We have also seen great success with the US Credit Spotlight protocol enhancement which continues to grow, total trading volume now exceeding $769M* since launching in late June.
For more information on the Spotlight Dealer Diversity Program, please click here.
Shining a Spotlight on Diverse Dealers: Q&A with Chris Bruner
Video: Diverse Dealers in Our Marketplace
*as of August 31, 2022