Tradeweb Markets reported trading volume amounting to $41.7 trillion in May 2024, representing a 40% year-over-year increase in average daily volume (ADV) to $1.9 trillion. This significant growth highlighted the heightened activity across various trading segments in the electronic marketplace.

Strong Institutional Activity

US government bond ADV surged by 33.4% YoY to $192.5 billion, supported by broad client sector growth and favorable market conditions. European government bond ADV experienced a slight dip of 0.4% YoY to $41.4 billion. The adoption of new protocols and increased primary issuance in Europe and the UK contributed to sustained trading volumes.

Mortgage ADV climbed by 18.4% YoY to $197.1 billion, driven by heightened activity in dollar rolls, coupon swaps, and basis trading. Tradeweb experienced the second-highest total volume ever for specified pool trading.

Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term and swaptions with maturities of one year or more experienced a 53.3% YoY increase in ADV to $484.2 billion. Overall rates derivatives ADV rose by 67.9% YoY to $784.6 billion, reportedly boosted by a strong institutional activity and a 69% increase in compression activity.

Fully electronic US credit ADV grew by 46.7% YoY to $6.6 billion, with European credit ADV up 16.1% YoY to $2.2 billion. The US credit market posted a notable growth in RFQ, portfolio trading, and Tradeweb AllTrade usage.

Equities and Money Markets

Municipal bonds ADV increased by 11.1% YoY to $357 million, aligning with broader market trends as institutional activity outpaced retail activity. Credit derivatives ADV rose by 5.7% YoY to $8.7 billion, driven by heightened credit volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term and increased activity in swap execution facilities.

US and European ETF trading volumes declined, with US ETF ADV dropping 15.3% YoY to $6.1 billion and European ETF ADV decreasing 1.4% YoY to $2.3 billion. This reduction was primarily due to lower secondary market volumes and decreased equity volatility.

Conversely, repurchase agreement ADV saw a 28.7% YoY increase to $605.1 billion, fueled by heightened client activity on Tradeweb’s electronic repo platform. The market shift towards money markets was influenced by quantitative tightening, increased collateral supply, and adjustments in Federal Reserve policy.

Recently, Tradeweb introduced a new feature that connects its repurchase agreement and interest rate swaps to enhance execution workflow in these markets. The electronic marketplaces aim to boost efficiency in how institutional clients navigate these markets through the new offering.

The integration between the two markets aims to respond to heightened volatility in money markets caused by shifting expectations surrounding central bank policies. The platform has integrated overnight index swap curves into the repo trade negotiation process to provide institutional clients with insights into pricing to address this challenge.