Before answering this question, let’s look at the key drivers transforming fixed income markets. First and foremost, the pace of electronification has been growing rapidly. Looking at trading activity on our platform alone, average daily volume in 2024 across Tradeweb Markets was 55.8% year-over-year, and overall volume processed on our platform now surpasses USD 2 trillion each day, which is really incredible. Secondly – and partly due to an increase in passive investment strategies – there has been a rise in portfolio trading, where a basket of bonds can be traded in one go with a single counterparty. Furthermore, when you look at the regulatory environment, there has been a wider push towards more transparency.

Electronification has led to digitisation, which in turn has spurred the growth of fixed income markets. This has led to more data being available, which in turn helps boost liquidity and subsequently more trading, and the continuation of this upward cycle of growth.

When we think how this data can be used to further modernise fixed income markets, we look back at our long track record of collaborative innovation with our clients. We keep asking ourselves how do we find new ways to advance trading and help to solve the problems they may face.

A good example of this approach is our Trade at Close functionality. Our clients told us they wanted to be able to execute trades when markets closed, but they needed a benchmark rate in order to do that. Since we had partnered with FTSE Russell in 2017 to take over from the UK DMO the calculation and publication of the official closing prices for UK Gilts, we were an obvious partner to deliver a solution. We have since launched benchmark closing prices for US Treasuries and European government bonds, and we have also expanded the methodology for UK Gilts to include bid- and offer-prices.

In the US, another pain point we solved for clients was the inclusion of less liquid securities in their portfolio trades on the platform. Before incorporating them in their basket, investors needed a price for every line item in that portfolio. By leveraging our Automated Intelligent Pricing (Ai-Price) tool, which uses advanced AI techniques and machine learning models, we were able to predict the price of a security based on information available on our platform, as well as from a number of public sources. As these less liquid securities begin to be included in portfolio transactions and trade, it leads to an uptick in liquidity from these discoverable prices.

Lastly, in Europe, there was growing demand from institutional clients for real-time Indicative Net Asset Values (iNAVs) for exchange-traded funds (ETFs). They enable investors to efficiently evaluate their positions, make better-informed trading decisions, and enhance their transaction cost analysis (TCA). So, in 2023, we partnered with BlackRock to deploy our iNAVs across their entire iShares ETF suite in Europe, using real-time prices from our trading platform. We now run over 900 different ETFs simultaneously, providing intraday indications of an ETF’s value based on the market price of its constituents, thus creating a more immediate and realistic view of the ETF market at any given point in time.

These examples are the key pieces that Tradeweb has built into our toolkit for investors to help to modernise fixed income markets.

What are the most impactful changes AI is making on electronic trading, and markets in a wider sense?

First, let’s separate out the traditional AI that is linked with machine learning, and the more nascent generative AI that has been proliferating in recent years. We have leveraged AI for building several of our pricing models and creating predictive execution algorithms, as well as to predict volumes on the platform. These tools have become more sophisticated, more precise and used more broadly in the industry.

Meanwhile, generative AI is largely being used as a productivity enhancement tool, with one of our largest use cases right now being code writing. We believe we may see that area broaden to what’s called agentic AI. These are tools that are built for a specific purpose and help automate what was previously more of an administrative function. We are only at the tip of the iceberg for how generative AI tools will be used in the future, and there are a lot more use cases that we are exploring.

It is important to note that these tools are not perfect. They can help with a lot of administrative functions, but they can sometimes hallucinate and produce incorrect outputs. There are ways to decrease that and make the models more precise and reliable, but that takes work and time experimenting as well. Overall, we are seeing the democratisation of information and access to that information. These tools make it easier to get not just data, but information too. But, we should bear in mind that although AI is an incredibly useful technology, it is only as good as the data that feeds it, so having high quality data is especially important.

What are the main benefits of using benchmark closing prices?

It is broadly understood in fixed income markets that evaluative prices lack precision. Prices are a really basic thing in the industry; they are part of the plumbing that keeps everything going. It is crucial that market participants have access to benchmark closing prices that are both accurate and reliable. The Tradeweb FTSE Benchmark Closing Prices serves as key market indicators and risk-free benchmarks that have been built in accordance with the EU and UK Benchmark Regulation and the IOSCO Principles for Financial Benchmarks.

We have a fully disclosed methodology that is published on the FTSE Russell website. Tradeweb is the calculation agent and FTSE Russell is the benchmark administrator. Their role is to verify that we did everything we said we would do. Having that third-party validation is really important to ensure that all the necessary steps were completed correctly.

Our prices are created out of actual streaming quote data from the Tradeweb platform. They are fully automated, so there is no human judgement determining what they should be. In FASB Fair Market Value regulation, specifically FASB 820-10, a Level 1 price has to be created out of quoted data from an active market. We understand from several market participants that our prices qualify for Level 1 status under that regulation, which is an important differentiator from evaluative prices that would not be eligible for this distinction.

We also do extensive back testing of our prices and can produce quantitative measures of how close these prices are to actual trades that occurred in the market at the time of the close. This additional data, coupled with the rigorous information that we can provide on them, can help participants who are regulated under Rule 2a-5 from the US Securities and Exchange Commission (SEC) to comply with providing greater detail on why the prices they are using are actually of high quality and appropriate for their use case.

Other benefits of our benchmark closing prices is that they can be used as reference rates in derivatives contracts, and can also be used for investors’ trade-at-close strategies. Moreover, as the prices are derived from actual real-time data on our platform, there should be a very minimal difference between what was actually occurring in the market at the close, and where the ending closing price is. This helps market participants, especially portfolio managers, to reduce both the noise in their portfolio and in their portfolio tracking error overall.

How exactly does publishing these prices 15 minutes earlier positively impact participants as regards their portfolios and trading strategies?

Expediting the publishing time of the Tradeweb FTSE UK Gilt and European Government Bond benchmark closing prices is a really exciting development and a significant step in further expanding our benchmark pricing capabilities to meet growing client demand. It enables market participants to complete their end-of-day trading strategies earlier, mark their books faster, and update their risk positions and portfolio valuations earlier.

This development is a reflection of Tradeweb’s ongoing commitment to enhancing our modern fixed income toolkit for institutional investors worldwide. By amplifying the information available to fixed income market participants, we aim to bring more transparency and efficiency into our space.

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Next year will see further market structure changes in fixed income. In dealer to client (D2C) markets for both rates and credits, the number of in-bound RFQs is rising exponentially, driven by all to all trading and the use of algo tools. While many of these tickets are small in size, they provide important data, are useful for dealers with positions and assist with execution statistics. We have already seen some dealers automate these lower value RFQs, but 2025 will see this accelerate to the point where the majority of dealers will need to look at solutions which support auto quoting and/or auto execution.  

The velocity of dealer to dealer (D2D) rates markets is increasing and in 2025, we expect more dealers to invest in co-location and access to alternative liquidity sources to place and adjust orders at micro second levels. Ultra-low latency is not simply a nice to have but is needed for dealers to remain competitive. 

Next year will also be the year when consolidated tape providers will be selected for the EU and the UK. We expect to hear a great deal about this throughout the year as the market moves towards a more transparent structure.

Liz Kirby, managing director, head of market structure, Tradeweb 

One of the key regulatory trends to watch in 2025 will be the SEC’s central clearing mandate for US Treasury transactions, particularly as it extends to repurchase agreement (repo) trades by 2026. While the initial phase of the mandate, slated for December 2025, focuses on US Treasury cash clearing, the most significant changes will come in the final phase, set for 30 June 2026, when repo transactions are brought into scope.

This mandate represents a major shift aimed at enhancing efficiency and transparency in the $4.5 trillion repo market, which has traditionally been relationship-driven, low-margin, and largely uncleared. Given the size, complexity, and short-term nature of this market, implementing central clearing poses some unique challenges. In 2025, our focus will be on collaborating closely with clients and market participants to craft tailored solutions that address these issues.

Derek Kleinbauer, global head of fixed income and equity e-trading, Bloomberg

In 2025, the upcoming US Treasury/repo clearing mandate will introduce some changes to the existing trading workflow and will have an impact whether trades are done via voice or electronically. Bloomberg is working closely with clients to ensure they have access to the necessary workflows in place and are well positioned to meet the mandate requirements.
  
Algorithmic trading will continue to gain traction across fixed income, as market participants are looking to leverage algos to execute trades, manage their risk, and optimise execution costs. We expect usage to grow in US Treasuries and will eventually be followed by adoption in other asset classes including corporate bonds.
  
In emerging markets, particularly Asia, we also see real opportunity for growth. In 2024, we’ve observed record electronic trading and a significant growth in trade volumes, average trade size and the number of clients who are active in these markets. This growth may represent an inflection point having been reached in the adoption of electronic execution. With India and Korea being added to major indices, this will further boost the year-over-year growth in electronic trading in emerging markets and the region remains a top focus for us.

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The evolution taking place in fixed income markets has laid the foundation for the recent growth in credit index futures, positioning 2025 as a pivotal year for further proliferation of the product and broad adoption by the market. Advancements we’ve seen in market infrastructure, such as the electronification of trading, real-time bond and ‘liquid’ index pricing, as well as enhanced analytics on Terminal to compute fair value and identify relative value opportunities, have transformed how buy-side firms are managing and trading credit risk. These trends will continue, enabling greater price transparency and standardisation of this market which, historically, aids in the development of exchange traded products like credit index futures. 

The existing contracts provide broad-based exposure to the European, US and emerging market corporate bond markets utilising Bloomberg’s fixed income benchmarks. In 2025, we envision an expansion of this global credit futures complex, allowing investors to target regional credit markets and specific risks such as duration, sectors, or credit quality, providing a more diverse range of tools for those seeking local exposure and precision. This will lead to increased cross-margining opportunities with correlated products, amplifying the utility and cost-effectiveness of the product. 

For global credit, we enter a year of uncertainty in 2025, with resilient corporate fundamentals and potential easing of monetary policy offset by ongoing geopolitical tensions. Investors will continue to find value in a flexible credit vehicle that can be used to deploy capital quickly, express a tactical view or hedge corporate credit exposures. The product will continue to attract a diverse range of market participants, from asset managers to insurers, looking for narrow bid-ask spreads and tight tracking to the benchmark. We expect further normalisation of credit index futures as a core instrument in credit markets.

Charlie Campbell-Johnston, head of automation, international, Tradeweb 

The last few years have thrown fixed income traders one curveball after the other, and automation has proven itself as an effective tool to deliver scalability and time efficiency across different products and through a range of trading protocols. On the other hand, systematic and cross-asset funds have used automation to create new trading activity and realise new strategies. 

The game, however, could change in 2025. A combination of technological innovation and high-quality data would enable traders to adapt their automation parameters to actual real-time market scenarios, giving them even more control over the trade execution process. After all, automation has already transcended its operational efficiency origins and this evolution would cement its hard-earned place at the core of a dynamic and innovative execution desk. 

Tucker Dona, head of business development, Baton Systems 

We are one-year away from the mandatory central clearing of US Treasuries, which is going to have a material impact on the way that firms post margin for this product. Firms wanting to offset the impact of higher margins need to spend 2025 making operational changes and upgrades to optimise their systems for trading and clearing US Treasuries. However, there is still more clarity needed on which CCPs market participants will choose to clear these products, and which model participants will use, such as sponsored or done-away. Thankfully, much of the operational preparation and workload can be done efficiently with support from vendors providing direct connectivity into the CCPs.

If firms are not able to efficiently optimise and mobilise available assets across the range of CCPs they will use for clearing US Treasuries, they are going to face operational and cost challenges. By using data-driven insights to select the most eligible and opportunistic collateral for the different clearing venues and then being able to execute all movement instructions, firms can manage the higher margin levels more effectively. They will also be able to reduce associated costs, and more efficiently manage better their collateral usage and its impact on available liquidity. 

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Both are set to begin their roles in January 2025 and report to Billy Hult, Tradeweb’s chief executive. 

Bruni was previously managing director, head of Europe and Asia business at Tradeweb, while Dixon joins from Hollis Park Partners having founded the firm and most recently worked as chief investment officer. 

Bruni’s new role, and the addition of Dixon, reflect the company’s global expansion, said Hult. 

“In recent years, Tradeweb has experienced substantial growth driven by accelerated adoption of electronic trading, entry into new markets and channels, and selected acquisitions. To ensure we are best managing the business today and taking advantage of ongoing strategic opportunities, we are delighted that Enrico will further expand his role, and that Troy will join our management team to co-lead our global markets business. 

Read more: Fireside Friday with… Tradeweb’s Enrico Bruni

Specifically, Bruni and Dixon will be jointly responsible for overseeing Tradeweb’s global markets strategy – seeking growth opportunities across products, geographies and the four client channels.

Dixon is currently a member of the Tradeweb board and will step down from this position on 31 December, prior to beginning his role as co-head of markets.

“Enrico and Troy’s highly complementary experience, respective track records, and deep expertise ideally position them to enhance Tradeweb’s broad offerings globally. I look forward to our ongoing work together to maximise Tradeweb’s potential now and into the future,” said Hult.

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Enrico Bruni

Specifically, the link will be between Tradeweb and TSE’s RFQ platform CONNEQTOR. 

According to the businesses, this will “allow Tradeweb buy-side clients to include CONNEQTOR liquidity providers when launching a trade enquiry on the Tradeweb Japan-listed ETF marketplace”. 

Enrico Bruni, head of Europe and Asia business at Tradeweb, said: “This exciting collaboration between Tradeweb and TSE’s CONNEQTOR platform demonstrates our focus on linking liquidity pools for the benefit of institutional investors looking to transfer risk with a higher degree of certainty. 

“We are in the business of enhancing clients’ execution experience, and we look forward to bringing more time and cost efficiencies to investors trading Japanese ETFs, both locally and globally.”

The first transaction on new connectivity has already taken place with Global X Japan having been the first to execute.

Through the direct link, clients can submit orders from the Tradeweb user interface to CONNEQTOR’s list of market makers as well as to Tradeweb’s network of liquidity providers. 

Transactions with CONNEQTOR market makers will be cleared and settled through the post-trade infrastructure of TSE.

“CONNEQTOR has been developed as a platform to enable investors to trade ETFs ‘faster and cheaper’. We hope that the new connection with Tradeweb will promote investment in the Japanese market by allowing investors outside Japan, who have had difficulty using CONNEQTOR, to easily access ETFs listed on the Tokyo Stock Exchange from overseas,” added Moriyuki Iwanaga, president of Tokyo Stock Exchange.

“TSE will continue to strive to provide and develop a highly convenient market environment, where investors can enjoy better prices and smoother execution.”

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Lisa Schirf

Launched 40 years ago, The WGBI measures the performance of fixed-rate, local currency, investment-grade bonds and comprises sovereign debt from over 25 countries, denominated in a variety of currencies. 

Tradeweb FTSE Closing Prices are expected be included in March 2025.

“The World Government Bond Index is FTSE’s flagship global index and a leading global benchmark for fixed income markets,” said Lisa Schirf, global head of data and analytics at Tradeweb.

“The inclusion of Tradeweb’s benchmark closing prices in FTSE’s indices validates our continued commitment to develop the next generation of fixed income pricing and index trading products for traders and investors worldwide.”

These benchmark prices can be used in index construction, as well as reference rates for a broad range of use cases, including trade-at-close transactions and derivatives contracts.

In addition to providing benchmark closing prices, Tradeweb stated that it plans to bolster electronic trading functionality for FTSE Russell fixed income indices and customised baskets.

For clients seeking to efficiently express a view on FTSE Russell indices and baskets, Tradeweb added that providing enhanced trading functionality can help efficiently manage what are often their largest and most critical trades.

“We’re pleased to announce the price source change within our global fixed income indices to include Tradeweb FTSE closing prices for these significant global rates markets,” said Scott Harman, head of fixed income, currencies and commodities at FTSE Russell.

“It ensures our indices continue to incorporate transparent, representative data sets across the diverse universe of fixed income markets that they track. Additionally, FTSE Russell’s benchmark administration of these prices brings a new level of transparency and rigorousness to the valuation of fixed income markets and our indices.”

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Lisa Schirf

As seen with existing Tradeweb FTSE closing prices for UK gilts and European government bonds, the new US Treasury closing prices will incorporate trading activity from Tradeweb’s electronic platform, which the firm claims to result in more robust benchmark pricing.

The new closing prices facilitate the calculation of bid and offer prices, capturing transaction costs based on executable pricing quotes collected via the Tradeweb platform. This builds on top of mid prices, which are produced for all asset classes.

The pricing data set features coverage of various of security types including US Treasury notes and bonds, bills, strips and Treasury Inflation-Protected Securities (TIPS), with both a 15:00 and 16:00 New York snap time.

“As we continue to expand Tradeweb’s collaboration with FTSE Russell, our clients gain access to a broader set of benchmarks for use as reliable closing prices in their investment process and end-of-day trading strategies and other purposes,” said Lisa Schirf, global head of data and analytics at Tradeweb.

“We believe the Tradeweb FTSE US Treasury closing prices will serve as a unique foundation for the global fixed income markets and their launch further demonstrates our commitment to the electronification of the markets.”

The extension of closing pricing to the US Treasury market will help expand benchmark pricing capabilities across a range of fixed income securities. Namely, USB-denominated credit securities will be included, which are largely underpinned by US Treasury valuations.

The new methodology is expected to be incorporation into UK gilt and Euro government closing prices, including the addition of bid and offer prices.

 “The launch of Tradeweb FTSE benchmark pricing for the US Treasury markets, represents significant progress in realising our ambition to offer the financial markets a better, more representative solution for valuing fixed income securities,” said Scott Harman, head of FICC indices at FTSE Russell.

“We recognise the criticality of the US Treasury markets to the investment ecosystem, and the need to continue to offer innovative benchmark solutions to our clients for this important asset class.”

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Nicola Danese

Higher money market volatility as a result of revised expectations of central bank policy actions has led traders to increasingly reference spreads to overnight index swap (OIC) curves when evaluating pricing of fixed-rate repos.

Tradeweb claims to be the first electronic trading platform to make OIS curves available during the repo trade negotiation process, which will enable institutional clients to better assess the price competitiveness of different repo rates across different currencies and maturities.

“By linking our repo and swaps platforms, we are transforming what used to be manual, disconnected and time-consuming processes into efficient, time- and cost-effective digital workflows,” said Nicola Danese, co-head of international developed markets at Tradeweb. 

The OIS spreads are generated for all GBP, EUR and USD trades on Tradeweb’s repo platform, which will reflect the exact term of each repo trade, leveraging off swap curves on the IRS platform.

Following the execution of a long-dated fixed-rate repo transaction on Tradeweb, buy-side traders will also be able to manage their interest rate exposure in a fully electronic workflow, essentially helping to achieve straight-through processing alongside reducing operational risk.

Trades are able to pre-populate a corresponding OIS ticket with the details of their completed repo trade, including start and end date, direction and cash amount, and send a request-for-quote enquiry to liquidity providers on Tradeweb’s IRS platform.

“In today’s active rates environment, Tradeweb provides us with essential information for executing a fixed-rate repo transaction,” said Nick Sheffield, portfolio manager in the Money Markets team at Insight Investment.

“We seek out technology that can help enhance investment outcomes for clients and welcome innovations that support speed of decision-making and execution processes.”

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Billy Hult

The purchase price for the acquisition of ICD – an institutional investment technology provider for corporate treasury organisations trading short-term investments – is expected to be funded with cash on hand and close in H2 2024 subject to customary adjustments and a regulatory review.

Billy Hult, chief executive of Tradeweb, said: “ICD is an exceptional opportunity to acquire a leading investment platform for corporate treasurers, a fast-growing channel within fixed income markets and a strong strategic fit for Tradeweb.

“Acquiring ICD will further diversify our client and business mix, advancing our track record of expanding into adjacent markets to improve client workflows. As part of Tradeweb, ICD will also be positioned to drive the adoption of electronic trading for corporate treasurers.” 

ICD – one of the US’ largest institutional money market fund portals – currently provides its services to more than 500 corporate treasury organisations from growth and blue-chip companies across 65 industries and over 45 countries, allowing customers to invest in money market funds and other short-term products to manage liquidity. 

Following acquisition by Tradeweb, ICD is set to provide a comprehensive solution for corporate treasurers and asset managers worldwide “to manage short-term liquidity needs and FX risk, as well as optimise yield and duration via Tradeweb’s existing suite of products”. 

ICD’s products include ICD Portal and ICD Portfolio Analytics. The former is a one-stop shop for researching, trading, analysing, and reporting on investments, while the latter is an AI-driven cloud solution which is used to aggregate positions across a corporate treasury’s portfolio for analysis and reporting.

Tory Hazard, chief executive of ICD, said: “This acquisition will enable ICD clients to have integrated access to Tradeweb’s fixed income marketplace, while continuing to trade through our existing technology.

“The combined offering delivers even more of what corporate treasury wants, and together, we will be able to unlock the full potential of our technology.”  

Following close of the transaction, Hazard will report to Tradeweb president Thomas Pluta and join Tradeweb’s Operating Committee.

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As part of the deal, the fixed income platform provider will provide ETPs for the central bank and other Eurosystem National Central Banks (NCBs).

Billy Hult

The term of the contracts is four years with the option to extend twice for an additional two years.

Tradeweb’s ETPs will cover the trading of EUR-denominated bonds, US Treasuries, Japanese government bonds, USD- and EUR-denominated supranationals, sovereign and agency bonds and USD- and JPY-denominated interest rate swaps.

The news follows a similar win by Tradeweb in 2015 where it also secured the tender to supply ETPs to the central bank following a bid process.

“We are grateful for the opportunity to provide trading services and solutions to the European Central Bank for another term,” said Tradeweb Markets chief executive Billy Hult.

“We remain focused on continuing to collaborate with the ECB, while enhancing the trading experience for central bank and sovereign wealth fund clients across our platform.”

More to follow…

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