Tradeweb Pushes New Credit Trading Model in Europe – eFinancial News
May 20, 2016 \ 9 Comments
Full Article: eFinancial News
Tradeweb launched a new trading model on May 4, called FlexRFQ, which enables investors to add more dealers to an RFQ enquiry if it does not receive prices from the counterparts included in the initial request within a specified time frame.
Hate to break the bad news but this is not ground breaking. If anything it is an attempt to follow MAX with open trading but given their ownership structure not go to far away from the existing market structure…… until they have to. I can’t see this changing the broken bond market in EMEA at all and as per last weeks article on how often electronic prices actually work I don’t see electronic platforms doing anything other than adding further costs to the trading process at this stage….. you pay bid/offer plus vendor fees per trade or a subscription. A… Read more »
This certainly isn’t groundbreaking and it reflects the ownership of TW. Let’s see, I didn’t get the quote I wanted so now I go to the second-string? If the dealers are the only source of liquidity, is it a given that someone is just waiting for an RFQ to provide liquidity? What if it fails the second time? Is the plan to go to the broader marker? If so, then will those recipients know that they’re the third call?
Once this all takes place, how much time has passed? I feel the need for speed…
(Highly plausible transcript of Tradeweb meeting with a dealer to discuss the impending launch of FlexRFQ) Tradeweb (after walking the dealer through the protocol): “Sooooo, what do you think?” Dealer: “You mean we get to see a request for quote AFTER other dealers have received it and did not respond? What’s not to love?” To a dealer or market maker, the value of order flow is determined by when you received it and how exclusive the information is to the market. From the description of FlexRFQ in this article, some dealers will get the enquiry only after other dealers have… Read more »
Guess who drives the bus at TradeWeb? Hasn’t MKTX already debunked some of these theories with their vocal all to all push?
There is no value to information slippage in the blasting out thousands of odd lot time sensitive RFQ lists
Dealers have shown little resistance in paying a hefty fee to MKTX, while allowing themselves to be disintermediated and others to freeride on their dime to see the same order flow.
While an improvement, why not go further? Why is there a cat and mouse game of the largest players in the space and publicly marketing these small improvements? Seems like a slight differentiation from MA. If it gains some slight advantage, everyone else will copycat. Both TW and MA have the ability to do much more, take some real risks and deliver value added functionality from a position of real strength. BBG, MA and TW are the only real players with a network. Why not exploit that by taking real risks? What’s the reaction if you were one of the… Read more »
OK, I get all of you. But unclear that poking fun is necessary here. Yes, TradeWeb could release its own version of “Open Trading” (amazing that ‘all to all’ has morphed into “open trading” just because MKTX CEO didn’t want to antagonize the dealers and believed it was good marketing) but you may want to ask ‘why’? For the entire prior decade, TradeWeb got lambasted in the States for being a ‘me too’ credit platform and never gained traction. In fact, as we all now know, TradeWeb has to pretend that it just launched their US credit effort in Oct… Read more »
Tough crowd in here. I’m with Merlin, I perceive that Tradeweb is understandably trying to be slightly different/creative while catering to their ownership. Their mandate is to break the monopoly that dealers now have to contend with in the RFQ space (more so in the US than Europe), and they have been given a lot of money and time to do it. Simply hanging around the goal mouth may be the best strategy with a client base that is actually quite resistant to creativity and change. I think Mustang was so correct when he said, “This is exactly what’s wrong… Read more »
Perhaps TW should look at rolling out the dealer-sweep protocol of matching at mid for <=1mm with a follow on if required to the Buy-Side and see what happens. Or maybe some dealers are already putting Buy-Side flow into it so this would just make everyone clear on who they are actually doing a trade with. While not being the utopia at least it actually moves the market structure although pro's and con's for doing this so deep thought required and the Buy-Side would have to make some concessions to make dealers comfortable this is not disintermediting them further Then… Read more »
Yes, Stinger – tough crowd. Some facts: Blast RFQ creates noise. Dealers get thousands upon thousands of RFQs per day. It is impossible to keep up so, many dealers don’t pay attention. Average Dealer time-outs can exceed 80%. If a TV show (for dealers) forced you to watch commercials 90% of the time (blast RFQs), you would just shut it off…or, not pay attention. Moreover, if I’m a deal in comp with 99 other dealers I probably did something wrong to win the trade. Winners curse anyone? That’s why the RFQ-6 protocol dominates Europe. Dealers pay attention when they receive… Read more »
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