Enrico Bruni, managing director and head of Europe and Asia Business at Tradeweb, discusses the challenges posed by current market conditions.
How has the current market environment impacted trading?
Without a doubt, this has been a very volatile year for financial markets. The war in Ukraine, interest rate hikes and rising inflation are just some of the macro events significantly changing our world since December 2021. Through this period of uncertainty, however, one thing that has remained unchanged is our early-mover advantage of operating a diversified business.
As a result, we were able to achieve record volumes across our macro products during extreme bouts of volatility. Even when fixed income markets were not functioning as well, our diversification allowed us to provide clients with access to liquidity in more than one way, each time tailored to their specific needs. Whether that was through fixed income ETFs, portfolio trading or index credit default swaps, for example, we’ve helped our clients navigate tricky market conditions, simply by giving them choice and flexibility at the point of execution and beyond.
The mix of products our customers are trading has also evolved. As we find ourselves in unprecedented times of surging inflation, Tradeweb’s ability to offer trading solutions for the entire asset class spectrum has been well received by the buy-side community. We have not witnessed any slowdown whatsoever in the electronification of the markets where we operate, despite the occasionally turbulent global macro conditions. Emerging market swaps are a great example of this resilience. Even though they are not as electronic as their developed market equivalents, as leaders in the space, we’ve seen them reach new levels of digitisation this year.
What are the key changes you are making to your offering?
We are always looking at which market segments could be further electronified, specifically from a product scope perspective. For instance, we have been laser-focused on expanding our emerging markets offering and this year we have gained momentum in both EM bonds and swaps.
Repo represents another big opportunity for us, not just in terms of revenue growth but also from a structural viewpoint. Bond markets, electronic or not, can only be as efficient as the repo market fuelling them; to this day, digitisation in the dealer-to-client space has stayed low, so we are going after that sizeable market.
Innovation is also a core part of Tradeweb’s DNA, and we are constantly adding to our long list of technological breakthroughs. As a global company operating across multiple products and geographies, we want to be the best at connecting all those different markets together. Examples include linking portfolio trading with the fixed income ETF market, and our multi-asset package and cross-market trading tools, which bring together interest rate swap and bond markets.
A more recent development is the first fully automated dealer-to-client EUR future cross-client transaction on Tradeweb and Eurex, helping to improve liquidity and execution for swaps versus futures packages. We are also excited to be working together with the London Stock Exchange Group’s FXall to develop enhanced solutions that link trading workflows in EM bonds and EM currency swaps.
We also continue to invest in our Automated Intelligent Execution (AiEX) tool, a trading automation solution we first brought to market ten years ago. Since then, we haven’t stopped expanding its product coverage and intelligent features, making sure our customers are comfortable using it for every type of trade and in any market environment.
You have reported strong growth. Do you see it continuing and what have been the drivers?
We are absolutely continuing to see growth. The drivers are the same as ever and they centre around the ongoing evolution of technology and proliferation of data. There is a push for more innovation, more regulation and more transparency in trading. Tools like AiEX bring tangible benefits to customers, ranging from time and cost efficiency to compliance with best execution policies and implementation of investment objectives. When assessing execution efficiency, our data shows that AiEX on average performs better than request-for-quote (RFQ), achieving an 8% improvement on bid-offer capture.
Another big focus of our business is data. There has always been a positive feedback loop between data and trading activity on our platform, as they serve and support each other naturally. Clients use our data to benchmark their trades against their peers, improve performance and counterparty selection, and prove best execution.
Ultimately, electronic trading is better than non-electronic and our platform is getting smarter at completing different types of trades. Whether they are smaller or larger, low or high risk, liquid or illiquid – we have tons of different protocols to address different trading scenarios and help traders successfully execute their transactions. We are getting better at this every year, maintaining focus on improving our value proposition for both buy- and sell-side clients.
What will be your greatest challenges and how will you overcome them?
We have had a very strong year so far, despite the tough economic backdrop. However, managing this high growth can pose certain challenges, particularly given the global multi-asset, multi-client nature of our business. Having a presence in so many different markets and speaking to so many different clients means we get at least 10 ideas a day. We have to ask ourselves, which idea is the right one to pursue? Which is the most impactful for the industry and its participants?
At the same time, we need to take into consideration the unique requirements of each jurisdiction we operate in. Aside from the U.S., we have offices in London, Amsterdam and Paris in Europe, China, Hong Kong, Japan and Singapore in Asia, offering our services to clients in more than 65 countries. While the diversity of our product offering has helped us maintain growth in difficult market conditions, it has also added more responsibilities on our part. We simply cannot allow ourselves to get comfortable.
Instead, we continue to collaborate with clients to reach the next frontier in electronification. We listen to their needs and engage with them to build solutions that address their pain points, catering for diverging regulatory frameworks, trading practices and market structure. Tradeweb’s key competitive advantage is its people, and we pride ourselves in our constant engagement with clients to achieve what we call ‘collaborative innovation’.
Are there particular technologies you have invested in?
Revamping our user interface (UI) has been a top priority. The Tradeweb UI occupies a dominant place in traders’ screen real estate, and we have built on web-based technologies – such as JavaScript, Chromium and Angular – to enhance its look and feel, incorporate new functionality, and ensure a seamless trading experience for all our clients. From a technology and design perspective, we believe our new interface is the most advanced one in the market.
Integration has been another important area of focus, as it facilitates the deployment of new protocols and tools to users’ systems. So, we have been investing in cloud technologies to make sure clients can connect to us in the easiest and most cost-effective way. We want to meet them where they want to meet us, particularly when it comes to data exchange.
We have also heavily invested in automated testing technology that allows us to quickly release new innovative features, while ensuring – if not improving – platform stability. Our goal is to empower customers with functionality that gives them better access to liquidity, more competitive pricing and an optimal experience throughout the trade lifecycle. In turn, this investment allows us to attract and retain exceptionally talented technologists from across the globe.
What has winning this award meant for the firm?
Tradeweb does not operate in a vacuum. We need the industry’s feedback to ensure we stay on the right path. Winning this award serves as confirmation that the decisions we’ve made are the right ones, not just for our business, but also for the customers and recipients of our offering.
As collaborative innovators, we strongly believe that the best course of action is to partner with market participants to create meaningful solutions that stand the test of time. We have been doing that for a number of years, and this award spurs us to work even harder to make our clients’ workflows even more streamlined and efficient.
