Asia Awards 2023: Best trading network—MarketAxess

Product: Open Trading

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Overview

Global bond traders are constantly seeking new pools of diversified liquidity, especially during periods of high volatility to improve workflow efficiency and ensure best execution and transparency. This is especially the case for the more fragmented Asian markets. MarketAxess’ Open Trading (OT) offering is a trading ecosystem with over 2,000 global participants that addresses these problems by connecting the world’s largest all-to-all credit liquidity pool and allowing dealers and investors to trade with each other anonymously.

“MarketAxess provides liquidity, price discovery, execution cost savings and above all market depth to fixed-income market participants. By breaking down the walls between pools of capital and various pockets of bond inventories, they have brought transparency to the opaque world of credit trading, which makes the entire ecosystem fair and balanced and augurs well for the future of the asset class.” 
Tanuj Khosla, portfolio manager, Dymon Asia Capital

The solution

OT allows bond participants to trade directly with one another anonymously, disclosed, or through a combination of both, which helps drive trading velocity, improve efficiency and costs. Especially during tough market conditions, having over 2,000 participants on the platform as potential counterparties can mitigate the risk associated with relying on only a few dealers. For 2022, a record 38% (20% for Asia) of MarketAxess’ credit trading volume was executed via OT (vs. 36% in 2021).

Secret sauce

OT is an all-to-all electronic marketplace for fixed-income trading. Through OT, clients can access over 2,000 global participants, achieve best price and save on transaction execution costs. In 2022, OT posted 18% growth in Asia, while delivering total cost savings of $18.6 million to clients trading Asia-Pacific bonds. About 20% of Asian volume on MarketAxess was executed via OT, underscoring its popularity in the region.

Recent milestones

  • Live Markets is a solution for streaming execution of liquid, recently issued paper that allows OT users to trade discreetly in larger size while limiting information leakage.
  • Added a feature allowing clients trading emerging markets (EM) local currency bonds to enter into workups with dealers upon order execution
  • EM clients using the Switch Trading protocol can now settle in USD to minimize the FX risks in local currency bond trades.

Future objectives

  • Traders can currently trade 28 local currency bond markets on MarketAxess. Later this year, they will be also able to trade these local currency bonds via OT. 
  • MarketAxess is set to launch Auto-Responder, which utilizes integrated intelligence from CP+ to enable traders to automatically respond to trading opportunities based on pre-set criteria.
  • The firm will launch a new price protocol for US investment-grade bonds.
“MarketAxess’ goal is to unlock new trading opportunities for our clients and to better optimize the efficiency of their trading desks, supported by actionable data. As we continue to expand in Asia, it is increasingly a disadvantage for clients to forgo our network effect. Users will have access to much more liquidity and data, especially in times of volatility, which they won’t be able to find anywhere else.”
Riad Chowdhury, head of Asia-Pacific, MarketAxess

Why they won

MarketAxess follows up its success in the recent Inside Market Data & Inside Reference Data Awards by winning the best trading network category in this year’s Asia Awards, thanks to its Open Trading (OT) offering. OT is an all-to-all electronic marketplace for fixed-income trading, designed to allow bond traders to interact directly with one another with the view to driving trading velocity, improving efficiency, and lowering costs, especially crucial during times of uncertainty and high price volatility.

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