Since their inception in the early 2000s, fixed income exchange traded funds (ETFs) have always sparked debate among financial markets professionals. Advocates point to the ability to gain instant exposure to a broad range of securities with lower transaction costs and, in some cases, better overall liquidity than the underlying bonds themselves. Detractors warn that the potential for a liquidity mismatch between the ETF and its underlying products could create a recipe for trouble during periods of heightened volatility.

Who’s right? Tradeweb recently assembled a panel of experts on the topic to examine the performance of fixed income ETFs over the last several months of COVID-19-inspired volatility, taking a close look at how the asset class performed throughout some of the most challenging conditions we’ve seen since the Global Financial Crisis. Their consensus: fixed-income ETFs have passed the test.

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NEW YORK / LONDON – July 16, 2020 – Tradeweb Markets Inc. (Nasdaq: TW), a leading global operator of electronic marketplaces for rates, credit, equities and money markets, and Intercontinental Exchange, Inc. (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announce that Tradeweb and ICE Benchmark Administration Limited (IBA) have published a paper introducing daily Tradeweb ICE Constant Maturity Treasury Rates (Tradeweb ICE CMT Rates) for review and comment by market participants.

The Tradeweb ICE CMT Rates have been designed to provide market participants with a daily overview of U.S. Treasury yields for standard maturities.

The Tradeweb ICE CMT Rates will be based on an interpolated U.S. Treasury yield curve from which standard maturity dates and associated U.S. Treasury yields will be published. The Tradeweb ICE CMT Rates will be published for maturities of...

The Covid-19 crisis has not only had repercussions for repo market participants by delaying the regulatory deadlines of 2020, like the EU’s Securities Financing Transactions Regulation (SFTR), but has significantly altered the trading environment. During the exceptionally stressed conditions experienced in February and March, repo markets stood up well according to a recent survey published by the International Capital Market Association (ICMA). Interestingly, the crisis has validated the electronic model and added greater weight to the debate that embedding electronic workflows is not only necessary for regulatory alignment, but can help market participants navigate the unique set of conditions they have been forced to operate in.

#WFHWhile the repo market has endured recent market turbulence well, it hasn’t been immune to challenges. Pre-Covid-19, repo trading relied heavily on in-person interactions: via squawk boxes, speed dials and shouting over the floor. Finding...

The perfect storm of a global pandemic and an energy price war pushed emerging market fixed income and derivatives markets to the brink in March. As the spread of novel coronavirus and ongoing oil price war between Russia and Saudi Arabia sparked a flight to safety, credit default swap spreads (CDS) more than tripled in some markets. The massive spike in volatility, which was felt around the world, was most pronounced in Asia, Latin America and EMEA.

These markets, which were already under pressure before the crisis, were being put to the test like never before.

Global Access Creates Opportunities

But, instead of collapsing under the pressure, emerging markets trading desks have stayed in the game throughout the crisis, offering a critical source of liquidity for market participants around the world as this unprecedented situation continues to unfold.

Two factors have made that possible: the worldwide...

The following data is derived from trading activity on the Tradeweb Markets institutional European- and U.S.-listed ETF platforms.

EUROPEAN-LISTED ETFsTotal traded volumeJune proved to be the third best-performing month on record for the Tradeweb European-listed ETF marketplace. Total traded volume reached EUR 41.5 billion, while 71.5% of transactions were processed via Tradeweb’s Automated Intelligent Execution Tool (AiEX).

Adriano Pace, head of equities (Europe) at Tradeweb, said: “June capped the second strongest quarter for our platform since launch, with more than EUR 104.7 billion in notional value. About half of the volume executed was in trades with an average size exceeding EUR 10 million. This shows that our platform continues to provide institutional investors with an effective solution for larger size trades, even as the number of smaller size transactions via AiEX grows.”

Volume breakdownAll ETF asset...

Our CEO, Lee Olesky, caught up with CNBC's Closing Bell team on work-from-home fixed income markets, portfolio trading and historic government issuance. Listen now.

Related Videos:Billy Hult speaks to City A.M. about market volatility during COVID. Listen here.

Yields dropped across most sovereign debt markets in June, amid continued central bank stimulus actions to address the economic fallout from COVID-19. Greece and Italy’s 10-year government bonds saw by far the biggest moves during the month. Both countries are eligible for the European Central Bank’s Pandemic Emergency Purchase Programme (PEPP) that was expanded by another EUR 600 billion to EUR 1.35 trillion on June 4.

In Greece, the mid-yield on the 10-year benchmark note fell by nearly 37 basis points to close the month at 1.12%, its lowest level for June. The country tapped the markets for an auction of 10-year debt totaling EUR 3 billion, its third successful bond issue so far this year. On June 29, the Bank of Greece issued a report forecasting an economic contraction of 5.8% in 2020, but a recovery of 5.6% next year and 3.7% in 2022.

Likewise, the Italian 10-year bond yield trended down throughout June, falling by...

NEW YORK – July 6, 2020 – Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported average daily volume (ADV) of $780.9 billion (bn) in June, a decrease of 8.9 percent (%) year over year (YoY). For the second quarter of 2020, Tradeweb reported ADV of $778.4bn, up 3.5% YoY, and preliminary average variable fees per million dollars of volume traded of $2.56.

Lee Olesky, Tradeweb CEO, said: “While historic interventions of central banks globally certainly calmed volatility across rates trading, activity remained high on Tradeweb platforms and June capped our best half of a year ever for volumes. Our clients want to do more electronically, and the diversity of our business across products and geographies was built to serve this demand.”

Tradeweb ADV in H1 2020 was $837.5bn, beating the prior six month record of $752.3bn set in H2...

Bond Connect reaches its 3rd anniversary today with a celebration video published online, highlighting key developments, major achievements, and future prospects of this landmark mutual market access scheme. The programme has become an important channel for foreign institutional investors to access China’s bond market. Market participants and guests across the globe also came together virtually to express their best wishes and recognition for the scheme.

Below are this year’s Sell-Side Technology Awards winners, announced during a virtual awards ceremony on the afternoon of June 26. The final two category winners of this year’s SST Awards—best sell-side product for 2020 and best sell-side technology provider for 2020—were won by Torstone Technology and IPC Systems, respectively. 

The Sell-Side Technology Awards 2020 Winners:

Best Alliance or Partnership: QuantHouse and SpiderRock

Best Artificial Intelligence (AI) Technology: AlphaSense

Best Cloud Provider to the Sell Side: BT

Best Data Provider to the Sell Side: FactSet

Best Distributed-Ledger Technology Project: VAKT Global

Best Implementation at a Sell-Side Firm: OpenFin

Best Infrastructure Provider to the Sell Side: HPR (Hyannis Port Research)

Best Outsourcing Provider to the Sell Side: Broadridge Financial Solutions

Best Reporting Platform or Service for the Sell Side: SteelEye

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Tradeweb CEO Lee Olesky’s business philosophy fuses a dogged day-to-day focus on clients’ needs with a holistic, long-term approach to the fixed-income space’s technological evolution.

Those principles not only explain the trading platform’s stunning success to date but also provide a blueprint for its future, giving them resonance for executives at other firms determined to leave their mark on the realm of finance.

1. Electronification trends: From Tradeweb’s landmark IPO to a big 2019 electronification push and the turn to bond trading platforms for liquidity during the coronavirus crisis, the last 12 months have arguably been electronic bond trading platforms’ best ever. Is the space ultimately winner-take-all? Or is there room for multiple platforms with different specialties to coexist peacefully and prosperously?Clearly, the scale of the opportunity for platforms like ours is significant. In Q1, our firm traded around 11% of our $7.6T total addressable...

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In the second of a two-part series on ‘Trading ETFs in Asia’, we examine how best to overcome the challenges when trading ETFs for investors in Asia.

The main challenge faced by Asian-based investors involves the fragmentation of the markets, which manifests itself in a number of different ways, including:

Hundreds of millions of dollars were added to, or subtracted from, the first quarter trading revenues of top Wall Street dealers due to derivatives valuation adjustments (XVAs), reflecting wild swings in counterparty creditworthiness over the period. Regulatory filings show that the debit valuation adjustment (DVA) – which affects the value of a dealer’s derivatives liabilities by factoring in their own credit risk – added more to revenues in Q1 2020 than in any other quarter since public disclosure of these figures began in 2014.

Read the full article ### Risk.net is proud to present Libor Virtual Week, summarizing the key next steps firms must take and exploring the remaining challenges ahead of the 2021 deadline – all of which you can access online between June 22-26.

LONDON (Reuters) - The mammoth bond market has long been the old-school bastion of the financial world, but the COVID-19 pandemic has cast a light on its future - and it looks electronic. Well, mainly.

A key benchmark used to price swaptions and some rate-linked structured products will move to a new methodology on May 29, after failing to print on more than a third of occasions this year.

The ICE swap rate, a daily measure of term-Ibor referencing swap rates from one to 30 years, vanished for several days in March as dealers pulled firm swap quotes from electronic order books – currently the only permissible inputs.From Friday, ICE Benchmark Administration (IBA) will start using a waterfall methodology, with the addition of dealer-to-client quotes from Tradeweb as a safety net when executable prices from central limit order books (CLOBs) are unavailable for a currency or tenor pair.

“In normal times, this would definitely give enough data [to publish the ICE swap rate] and it might even cope with abnormal times,” says a benchmark specialist familiar with the methodology.The period from January 2 to May 7 saw 1,914 of the scheduled 5,601 swap rates for euros,...

The following data is derived from trading activity on the Tradeweb Markets institutional European- and U.S.-listed ETF platforms.EUROPEAN-LISTED ETFsTotal traded volumeMonthly activity on the Tradeweb European-listed ETF marketplace reached EUR 29.65 billion in May. The proportion of transactions processed via Tradeweb’s Automated Intelligent Execution (AiEX) tool rose to 70.2%.Volume breakdownAll ETF asset classes saw net buying in May, particularly fixed income and commodities. Equity-based products saw their total traded volume increase to 54% of the overall platform flow, with ‘buys’ surpassing ‘sells’ by six percentage points. North America Equities was the month’s most aggressively-traded ETF category with EUR 5.9 billion in notional volume.Adriano Pace, head of equities (Europe) at Tradeweb, said: “The overall percentage of fixed income ETFs traded remained high in May, amid calmer financial markets and normalized volumes. Nearly...

 

Adriano Pace, our Head of Equities, Europe, recently spoke on a virtual panel at the ETF Live Europe Digital Summit where he discussed how to trade ETFs during periods of market volatility alongside speakers from Nutmeg, HANetf, and Granite Shares.