Fixed income platforms buoyed as all-to-all expands

Dan Barnes

Fixed income electronic trading platform operators have announced record trading volumes in the first quarter of 2017.

MarketAxess, platform operator for dealer-to-client and all-to-all trading in fixed-income securities, announced total trading volume of US$394.4 billion (€360.5 billion) for the first quarter of 2017, compared to total trading volume of US$310.0 billion for the first quarter of 2016.

Presenting the results to analysts on 26 April, Rick McVey, CEO of MarketAxess, revealed that Open Trading, the firm’s all-to-all model, had seen volumes reach a record high of US$59 billion in the first quarter with average daily volume up 56% from the same period last year. He reported that approximately 145,000 open trading transactions were completed in the first quarter, up 76% from 82,000 in Q1 2016, with 672 firms providing liquidity, up from 527 in Q1 of last year, driving a 103% year-over-year increase in open trading price responses.

He asserted that liquidity takers saved an approximately US$25 million in transaction costs through Open Trading while participants made average transaction cost savings of approximately 2.6 basis points in yield when they completed a US investment-grade transaction through Open Trading protocols.

Dealer initiated open trades reached a new high of 22% of total open trading volume in Q1. Open trading accounted for 34% of US high-yield volume, 15% of US investment-grade volume and 11% of emerging market volume in the first quarter.

Earlier this month Tradeweb Markets, a global provider of fixed income, derivatives and ETF marketplaces, reported trading activity in European Spread Products / Eurobonds had reached €73.8 billion in the first quarter of 2017, beating Q1 2016 by 22.3%.

March 2017 saw Tradeweb’s European Credit platform gain €14.17 billion in notional volume, up 10.2% from February 2017 and 51.6% year-on-year. Tradeweb reported that one-sided axes posted by dealers on its Eurobond platform peaked at more than €100 billion in Q1 2017, up 50% year on year. Over the same period, the number of axes – which link pre-trade information with trade execution – nearly doubled to reach 18,888.

The appeal of all-to-all platforms in Europe promises to provide further growth. Tradeweb recently introduced Blast RFQ, a flexible approach to trade and source liquidity for multiple smaller transactions in European credit, enabling clients to send enquiries to all of their liquidity providers simultaneously. Blast RFQ can be combined with existing FlexRFQ functionality, a feature which allows users to replace non-quoting dealers without shutting down their initial inquiry, restricting trade information leakage.