Tradeweb highlights “numerous volume records across rates, credit, equities, and money markets” in 2023

Rick Steves

“Despite a challenging start to the year, we reported a 27.6% YoY increase in average daily volume for the full year and broke numerous volume records across rates, credit, equities and money markets.”

Tradeweb Markets Inc. reported a total trading volume of $28.9 trillion in December 2023, with an average daily volume (ADV) of $1.46 trillion, marking a significant 43.3% YoY increase.

For Q4 2023, the total trading volume reached $104.4 trillion, and the ADV was $1.68 trillion, reflecting a remarkable 56.9% YoY growth. Notably, the average variable fees per million dollars of volume traded stood at $2.54.

Resurgence in fixed income due to high rates, geopolitics, volatility

Tradeweb CEO Billy Hult attributed the resurgence in fixed income to historic interest rate moves, geopolitical uncertainty, and market volatility. “Despite a challenging start to the year, we reported a 27.6% YoY increase in average daily volume for the full year and broke numerous volume records across rates, credit, equities and money markets. The fourth quarter was particularly strong in rates, and in December we reported a record 18.2% share of fully electronic U.S. High Grade TRACE for the month.”

According to the report, U.S. government bond ADV increased by 39.8% YoY to $159.5 billion, supported by growth across client sectors and sustained market volatility.

European government bond ADV rose by 21.5% YoY to $33.4 billion, driven by sustained rates market volatility and hedge fund activity.
Mortgage ADV grew by 34.1% YoY to $175.1 billion, supported by the broader rates market rally.

As to fully electronic U.S. credit, ADV surged by 56.4% YoY to $5.6 billion, with Tradeweb capturing a record 18.2% share of fully electronic U.S. High Grade TRACE. European credit ADV increased by 26.2% YoY to $1.6 billion, driven by strong activity in portfolio trading and Tradeweb Automated Intelligent Execution.

Equities and money markets also on the rise

Tradeweb also reported its equity trading metrics, including U.S. ETF ADV which experienced a 44.3% YoY increase to $10.9 billion, while European ETF ADV rose by 29.1% YoY to $3.2 billion. Institutional platform volumes in both U.S. and Europe were robust, with U.S. volumes up by 12.8% YoY.

As to money markets, repurchase agreement ADV saw a substantial 34.2% YoY increase to $508.7 billion, driven by increased client adoption of Tradeweb’s electronic trading solutions. These achievements culminated in a total ADV for December 2023 of $1.46 trillion, marking a 43.28% YoY increase.

The Q4 2023 ADV reached $1.68 trillion, showcasing a strong 56.9% YoY growth. The overall ADV for FY 2023 was $1.44 trillion, reflecting a notable 27.56% YoY increase. The bolded numbers in the data indicate records for the Tradeweb platform across various asset classes and products.

Tradeweb acquire r8fin and Nasdaq’s eSpeed

In April 2023, Tradeweb Markets completed the technology integration of Nasdaq’s US fixed income electronic trading platform, formerly known as eSpeed, which it acquired two years ago in a $190 million, all-cash transaction. Since then, Nasdaq’s central limit order book (CLOB) for electronic trading in on-the-run (OTR) US treasuries has been serving Tradeweb’s wholesale clients via Dealerweb.

In November, Tradeweb agreed to acquire r8fin in a deal that positions Tradeweb to significantly bolster its capabilities in algorithmic-based execution, particularly in U.S. Treasuries and interest rate futures. Founded in 2016 and based in Chicago, r8fin has carved a niche in the market with its suite of algorithmic tools and a thin-client execution management system (EMS) trading application.

These tools are tailored to enhance futures and cash trades, complementing Tradeweb’s existing array of trading platforms and services, such as Dealerweb Active Streams, Dealerweb Central Limit Order Book (CLOB), Tradeweb Request-for-Quote (RFQ), and Tradeweb AiEX (Automated Intelligent Execution).

The expected completion of this acquisition in the first quarter of 2024, subject to regulatory approvals and customary closing conditions, is anticipated to modestly boost Tradeweb’s revenue growth and operating margins, and be accretive to its 2024 earnings per share.

r8fin’s existing client base includes 65 relative value hedge funds, systematic hedge funds, professional trading firms, and primary dealers. Its technology is a pivotal tool in the market, facilitating algorithmic-based execution for an impressive daily average of over $23 billion notional in U.S. Treasury bonds and 350,000 futures contracts.

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