“The combination of quantitative tightening, heightened collateral supply, and current rates market activity shifted more balances from the Federal Reserve’s reverse repo facility to money markets. Retail money markets activity was strong as interest rates remained elevated and market expectations for rate cuts moved further into 2024.”
Tradeweb has reported trading volumes of $37.9 trillion for February 2024, with an average daily volume of $1.87 trillion, a notable 31.1% increase year-over-year.
The growth was observed across multiple asset classes, including U.S. and European government bonds, rates futures, fully electronic U.S. High Grade credit, equity derivatives, and global repurchase agreements.
ADV for U.S. government bonds up by 44%
The report highlights remarkable increases in ADV for U.S. government bonds, up by 44.0% year-over-year to $207.8 billion, and European government bonds, which saw a 17.9% rise to $51.0 billion.
These gains were attributed to growth across all client sectors, record institutional platform volume, and increased trading protocol adoption amid sustained market volatility. Moreover, mortgage ADV rose by 12.2% to $188.1 billion, with specified pool trading volumes hitting record highs.
Swaps up by 65.1%
In the derivatives market, swaps and swaptions greater than one year in duration experienced a 65.1% surge in ADV to $502.3 billion. Total rates derivatives ADV also increased by 32.1% to $789.7 billion, driven by institutional client activity and significant compression activity.
The credit segment saw fully electronic U.S. credit ADV jump by 49.9% to $7.7 billion, and European credit ADV increase by 4.7% to $2.3 billion. These gains were propelled by enhanced client adoption of Tradeweb’s trading protocols. However, municipal bond and credit derivatives ADV experienced declines due to market conditions.
Money
In equities, U.S. and European ETF ADV rose due to continued institutional adoption and increased functionality use. U.S. ETF ADV was up 20.6% YoY to $8.7bn and European ETF ADV was up 7.0% YoY to $3.0bn.
Money market segments, particularly repurchase agreement ADV, also saw a 33.8% increase to $550.3 billion, driven by heightened electronic trading engagement.
“The combination of quantitative tightening, heightened collateral supply, and current rates market activity shifted more balances from the Federal Reserve’s reverse repo facility to money markets. Retail money markets activity was strong as interest rates remained elevated and market expectations for rate cuts moved further into 2024,” said Tradeweb.
