Tradeweb integrating multiple liquidity pools across cash and futures with r8fin’s acquisition

Rick Steves

“We are developing an integrated approach to accessing the U.S. Treasury market through multiple liquidity pools across cash and futures – and r8fin is an important part of that approach.”

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Tradeweb Markets Inc. has completed its acquisition of r8fin, a technology provider specializing in algorithmic-based execution for U.S. Treasuries and interest rate futures.

This acquisition, announced in November 2023, is aimed at integrating r8fin’s intelligent execution capabilities into Tradeweb’s electronic trading platform for U.S. Treasuries. This integration will assist clients in adopting a comprehensive approach to trading U.S. Treasury bonds and related futures.

Tradeweb integrating multiple liquidity pools across cash and futures

Tradeweb’s CEO, Billy Hult, commented: “We are developing an integrated approach to accessing the U.S. Treasury market through multiple liquidity pools across cash and futures – and r8fin is an important part of that approach. This acquisition is very much in Tradeweb’s wheelhouse, and we believe it represents a meaningful step forward in how electronic trading can unlock new possibilities for relative value hedge funds and other clients. We are also pleased to welcome r8fin co-founder Assad Fehmy to Tradeweb.”

The acquisition is expected to modestly enhance Tradeweb’s revenue growth and operating margins and be accretive to its 2024 earnings per share.

r8fin’s technology, which includes algorithmic-based tools and a thin-client execution management system (EMS), supports futures and cash trades. In 2023, r8fin facilitated algorithmic-based execution averaging over $24 billion notional in U.S. Treasuries and 375,000 futures contracts per day. Its client base includes various financial entities like hedge funds, trading firms, and primary dealers.

Tradeweb, established over 25 years ago, is the leading electronic trading platform for U.S. Treasuries. It has a vast network covering institutional, wholesale, and retail markets. In 2023, Tradeweb reported facilitating an average of $146 billion per day in U.S. Treasury trading.

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.

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

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.

The resurgence in fixed income to historic interest rate moves, geopolitical uncertainty, and market volatility. 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.

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.

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