Tradeweb, Investortools integration targets buy side, retail


Tradeweb Markets and Investortools are integrating to bolster Tradeweb’s electronic trading platform to better target retail investors, furthering a trend of technology partnerships in the municipal space.

John Cahalane, Head of Tradeweb Direct, said the integration “made very good sense, given the breadth of our retail business, for us to combine our joint technologies, and expose it to the largest institutional investors” who may cater to retail.

John Cahalane, Head of Tradeweb Direct

John Cahalane, Head of Tradeweb Direct

Tradeweb noted that a growing portion of the $6.8 trillion invested in separately managed accounts (SMAs) is being directed toward the municipal bond market as retail investors and their advisors prioritize tax efficient assets. As such, the firms saw an opportunity to target larger institutions that want to interact with this order flow, and so electronic access and tools to help streamline workflows are “increasingly important as participants navigate the converging liquidity.”

Since the start of the year, Tradeweb has expanded FIX connectivity for clients seeking access to aggregated dealer inventory, and expanded automated trading options to give clients more optionality and flexibility, facilitating more than $40 billion in municipal bond trading, according to the firm.

Cahalane said that on an average day on Tradeweb more than 190 dealers and over 280 clients, including around 50 of the largest institutional investors, exchange 20% of all municipal bond trades reported to the Municipal Securities Rulemaking Board (MSRB).

“We are delighted to collaborate with Tradeweb Direct to offer our clients the benefits of seamless electronic trading within our Perform software.” said Jon Anderson, Chief Product Officer at Investortools. “Investortools is focused on building out a platform that allows our clients to keep adding AUM without adding headcount.”

So what about the headcount question?

It is quite clear that consolidation is occuring in the municipal space in various ways, however technology doesn’t have to take away jobs, Cahalane said.

“Technology brings efficiency. It doesn’t have to mean that technology replaces headcount; it can simply make those heads more efficient,” Cahalane said. “We see technology in three pillars: Liquidity, efficiency and streamlining of execution.”

He said that retail and institutional were going to converge over time and that it’s been evident in the rates markets and in corporates over the past few years. “We definitely saw that in 2013 and took the opportunity to extend our retail presence,” he said.

And he said he believes that the municipal market is starting to move in that direction. “The sell side has been the leader in other markets; it feels to us that on the buy side, they’re leading the innovation in munis as the space electronifies.”

“This space is very interesting right now. The traditional market structure model has started to genuflect, in a way, and evolve,” he said. “What we’re seeing is an ability to modernize the workflow of the buy side and technology is going to be an absolute necessity to make that happen.”

One Investortools client had positive things to say about the integration with Tradeweb.

“We have had a longstanding relationship with Investortools that involves collaboration on a host of trading and portfolio analysis projects designed to address specific portfolio management needs,” said Jason Audette, Vice President, Fixed Income Portfolio Manager and Trader at Boston-based Appleton Partners, Inc. “We value their innovation and see the recent collaboration with Tradeweb as another example. The fixed income markets are always evolving and electronic communication networks, like Tradeweb, have become increasingly important. These ECNs can offer a means of enhancing trade efficiency which ultimately helps us better serve clients.”

Vice President, Fixed Income Portfolio Manager and Trader at Boston-based Appleton Partners, Inc

Vice President, Fixed Income Portfolio Manager and Trader Appleton Partners, Inc

Vice President, Fixed Income Portfolio Manager and Trader at Boston-based Appleton Partners, Inc

This new integration comes on the heels of other changes and collaborations in the municipal space, and while Cahalane said that he sees perhaps their biggest competitor with this particular tool as ICE, in September, Tradeweb joined ICE to create Tradeweb ICE U.S. Treasury Closing Prices, designed to represent the daily market mid-price for Treasury securities. Tradeweb and ICE Benchmark Administration (IBA) are also planning to launch other pricing data. Tradeweb operates electronic marketplaces for rates, credit, equities and money markets and ICE operates exchanges and clearing houses and is a provider of data and listings services.

“Trusted reference price data is critical for financial firms to manage investment portfolios, evaluate the fair value of securities, perform compliance monitoring, and satisfy general accounting standards,” the firms said in a release in September.

Tradeweb Markets listed shares of its Class A common stock on Nasdaq in an IPO in April of this year and the offering was priced at $27 per share. Refinitiv has a controlling share but Tradeweb has its own board.

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