Tradeweb’s monthly trading volumes drop +12% in July

abdelaziz Fathi

Tradeweb Markets Inc. (Nasdaq: TW), a leading operator of electronic marketplaces for rates, credit, equities, and money markets, has reported its total trading volume for July 2023.

The group’s most recent volumes took a step back during the month, ending a consecutive string of increases this year. In particular, Tradeweb clients transacted a total of $25.6 trillion in July 2023, down 12.6 percent month-over-month from $27.3 trillion in June.

The average daily volume (ADV) for the month stood at $1.27 trillion, down 2 percent form $1.3 trillion in the prior month. However, the figure reflects a notable increase of 16.3% year-over-year (YoY).

In the Rates segment, U.S. government bond ADV experienced a robust 19.1% YoY growth, reaching $139.9 billion. Similarly, European government bond ADV surged by 17.2% YoY to reach $36.9 billion. The growth in this sector was fueled by strong activity across all client sectors, driven by higher interest rates that continued to stimulate trading in the retail market. The volatility in the rates market also contributed to increased volumes in U.S. and European government bonds.

The New York-based company disclosed a weak mortgage activity amid uncertainty over the future of the Federal Reserve’s policy. Mortgage ADV was slightly down by 1.1% YoY to $167.4 billion.

Short terms swaps’ turnover soared by an impressive 36.9% YoY to $253.1 billion per day, while total rates derivatives ADV was up 15.2% YoY to $361.5 billion. The surge in swap volume was primarily driven by heightened interest rate volatility, particularly in shorter-dated instruments, along with an 84% YoY increase in compression activity. This strong performance was also influenced by activity in emerging markets swaps, global inflation swaps, and the request-for-market (RFM) protocol, the company explains.

In the Credit segment, fully electronic U.S. credit ADV surged by 34.8% YoY to $4.8 billion, and European credit ADV increased by 38.6% YoY to $1.9 billion. This growth in U.S. credit volumes was fueled by continued client adoption across various Tradeweb protocols, including request-for-quote (RFQ), Tradeweb AllTrade®, and record portfolio trading. Tradeweb captured an impressive 16.4% share of fully electronic U.S. High Grade TRACE and a 7.1% share of fully electronic U.S. High Yield TRACE. Strong European credit volumes were supported by robust activity in sessions-based trading and RFQ.

Meanwhile, credit derivatives ADV declined by 38.9% YoY to $7.5 billion, mainly caused by the tightened spreads that led to reduced overall broader swap execution facility (SEF) market activity.

In the Money Markets, repurchase agreement ADV experienced robust growth of 24.9% YoY, reaching $496.3 billion. This growth was driven by further client adoption of Tradeweb’s electronic trading solutions, resulting in record global repo activity. Changes in U.S. market conditions shifted demand from the Federal Reserve’s reverse repo facility to money markets. Additionally, strong retail money markets activity continued due to elevated interest rates.

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