Tradeweb won Best New Product in the 2020 Markets Choice Awards.
How did Portfolio Trading come to be? Was it requested by clients or conceived internally?
“As with everything we do, portfolio trading was built in collaboration with our clients. Previously, market participants exchanging baskets of multiple bonds would assemble spreadsheets of bonds and prices, which were then emailed back and forth to liquidity providers. It was a painstaking process of iteration that could take more than a day to complete. Clearly, this could be made easier.”
Can you briefly describe the state of portfolio trading in the fixed income markets? How large is it as a percentage of trading business?
“Portfolio trading is uniquely useful in fast-moving, volatile markets, because it allows clients to move exact risk profiles quickly and safely. That’s a critical facility in periods of market stress, and we saw significant pick up among new clients as a result. That’s helped push portfolio trading totals higher this year: in the first quarter, $28.6bn of portfolio trading was facilitated on Tradeweb, which compares to $43bn for the entirety of 2019.”
How hard was it to develop the actual software/technology for Portfolio Trading?
“Tradeweb has tremendous reach across fixed income markets, which means we’ve built a lot of technology that we can adapt quickly. Still, we needed to design a common interface for both dealer and client for portfolio trading – one that made it visually easy to exchange, check and trade on common information – and we also made sure it integrated seamlessly with other proprietary tools.”
Did you work with the buyside to develop and test this product?
“Very much so. This was built with our clients in mind. Clearly, it’s a vital tool for the buyside, so their feedback was absolutely crucial, but we also listened to the sellside, and continue to iterate with our clients. The whole process needs to be seamless for both sides.”
What is the future of Portfolio Trading?
“Portfolio trading has proven very useful, very quickly, and we’ve seen increases in usage every month since launch. We believe that choice is the most vital option for our customers, and so we see portfolio trading alongside all-to-all trading, list trading, and electronically hedged trades as vital means of execution for our customers.”