SP Marketplace: Breakthrough Trading for Specified Pools
SP Marketplace leverages the most innovative technology, data and workflow tools to allow investors to trade specified pools in the market with top liquidity providers.
We sat down with Colm Murtagh, Head of U.S. Institutional Rates and Justin Monahan, Agency MBS Product Manager to learn more about our offering.
What is SP Marketplace?
Justin: SP Marketplace is the next generation for specified pool trading. It's a one-stop shop for every single customer we have, no matter what their business model is, to trade pools in the market with the top liquidity providers.
Colm: It's the future of pool trading. It's been built for all the needs of pool traders. We've taken feedback from the entire pool trading universe and have built a product we feel addresses all their needs.
Who is using SP Marketplace?
Justin: SP Marketplace speaks to the workflows of every one of our clients. The mortgage origination community has become a focal point for us because of the nature of their business - high frequency, large volumes, with most of the workflow being done completely on spreadsheets.
What workflow issues does SP Marketplace solve for?
Justin: Today, pools are traded on spreadsheet, from start to finish. When we talk to our customers, we pose the question, "How long does it take you to actually trade this list?" The specified pool market is ripe for automation. We estimate that roughly 5% of the market trades electronically as opposed to the TBA market, which is about 75 to 80% electronic. Over the past couple of years, average daily volumes in pools have been roughly $20 billion, most of which is traded via spreadsheet, and is highly inefficient and error-prone. SP Marketplace solves for that problem by mitigating the operational workload of executing a BWIC or an OWIC in the market.
What are some key features of SP Marketplace?
Justin: A unique aspect to pool execution is how involved a dealer salesperson is in the process. They're liaising between their customer and the trading desk. For the first time at Tradeweb, that salesperson can now log into the same trading software as the trading desk and work collaboratively across the desk. We've also introduced dealer axes, sharper pricing precision with 16th pricing, means of communication between the customer and the dealer, countering capability and more.
Colm: Another key feature is our Net Spotting functionality which has been wildly successful for us in the credit markets, so it was such a natural progression to incorporate that into our specified pool platform. We are the TBA platform that most people in the marketplace use, so why not use that TBA pricing to help price your trades?
What do clients like most about SP Marketplace?
Justin: The two most common themes that we hear from our clients are the need for flexibility and efficiency. We integrate with a client's order management system so they can receive post-trade messages, mitigating booking trades and trade errors. Clients also want to preserve the relationship that they have with their dealers, so there's still a human element to trading pools on SP Marketplace. We’re just streamlining the operational inefficiencies of trading a BWIC the old-fashioned way.
Colm: We've spent a lot of time collaborating with our clients, whether it's originators, hedge funds or asset managers, and we've really come to understand their workflows so we’re able to provide value and improve that workflow. We understand your workflow so you can trade as you did before, but in a much more efficient way.
Colm: The mortgage market is an incredibly important part of Tradeweb - our history and our future. We've innovated and collaborated with our clients over the past 20+ years - bringing the first TBA trade, first specified pool trade, Round Robin, we've even worked with Freddie Mac on their Exchange project, and now SP Marketplace. We're very excited about what the future holds within our Mortgages business, and to see where the specified pool platform brings us. We think our relationship with the mortgage market will continue to grow stronger and stronger. Our clients see us as a partner in this marketplace and that will help us continue to evolve and innovate.
Learn more about our offering for specified pool trading