Tradeweb has come a long way in Asia since it first opened up its market-leading platform to local trading hours in 2007 but for Li Renn Tsai, managing director and Tradeweb’s head of Asia, the firm is only at the beginning of its expansion in the fast growing continent.
In recognition of Tradeweb’s growing influence in Asia and, most importantly, of its central role in the development of the Bond Connect programme, the firm is named fixed income trading system of the year for 2017.
Bond Connect was established by the People’s Bank of China and the Hong Kong Monetary Authority to enable investors in mainland China to trade in the international bond market and for qualified international investors to trade onshore Chinese bonds.
Tradeweb was the first offshore trading platform to offer a gateway to the China Foreign Exchange Trade System (CFETS), which hosts the Bond Connect programme, and is the main trading interface for offshore investors to access Bond Connect.
It was more than two years ago when Tradeweb first engaged the key stakeholders CFETS and Hong Kong Exchanges and Clearing to begin discussions on the platform, and worked closely with them since to design and build the revolutionary link.
“The Bond Connect programme is unique,” says Li Renn Tsai. “In a sense it is the culmination of 16 years of access programmes that the Chinese government has put together. Many more offshore investors will be able to access the Chinese bond market following the launch of the link.
“It also brings new features that will make the local bond market more efficient. It was important to build functionality that made the market familiar to offshore investors.
“We designed Bond Connect in such a way that they have direct interaction with the onshore member instead of having to go through an intermediary as was the case in other programmes.”
Bond Connect allows eligible offshore investors to discover prices, submit orders and trade permissible onshore debt instruments.
Via the connection established in Tradeweb’s fully disclosed request-for-quote system, traders are able to send price requests to the market for all CIBM cash bonds, removing the need to execute though an agent bank.
International investors can use Bond Connect to access China’s multi-trillion bond market for the first time.
The scheme is also a signal of intent from Chinese regulators as to how they view the importance of electronic trading as the domestic market grows and internationalises.
“The Bond Connect stakeholders believe that electronic trading is the model on which to build the internationalisation of China’s bond market. It brings transparency for the buy side, efficiency of workflows and immediacy in the ability to transact,” says Tsai.
Tradeweb has been operational in Asia for over a decade and initially launched in the continent to bring its international marketplace of fixed income instruments to local investors.
Expanding trading hours in 2007 was a key step forward in that respect. Since its launch in Asia, it has also sought to develop and capitalise on opportunities to offer local products to its international client base.
In 2008, the firm added Japanese government bond and yen swap trading to its platform and has since built a dominant position in these instruments. Tsai says that the firm is looking to replicate its dominant position in Japan in other markets.
“Our success in Japan is a result of our strategy to offer international traders access to local Asian products. We are looking to bring the international products to the region and start trading in regional products that are relevant to the international market.”
More than 2,000 institutions from over 55 countries conduct their business on Tradeweb across more than 20 asset classes.
The firm is well positioned to continue to capitalise on the increasing trend towards the electronic trading of bonds.
Tsai says that the move towards electronic trading is gathering pace in Asia.
“We see the local market rapidly adapting to the advantages brought by the electronic trading of bonds,” says Tsai. “That is not just about the transaction but the ability to get pre-trade transparency and post-trade efficiency.
“Asia is full of opportunity and growth prospects and there is a lot of room for our expansion. We are always looking forward to the next opportunity in Asia.”