Fixed income traders are turning to more trade-specific and AI-supported pre-trade analytics to better inform protocol election and execution strategies, says Grant Adams, director of US credit at Tradeweb. Speaking to Trader TV, Adams discusses where he and his firm are seeing shifting trends in voice trading, request for quote (RFQ), and portfolio trading while buy-side firms try to navigate choppy markets. He also looks at developments in transaction cost analysis for supporting trader-portfolio manager collaboration, the demand for alternative liquidity providers, and where they are seeing a shift to multi-asset trading.
Interview
Josephine Gallagher – Buy sides for face day-to-day challenges in trying to glean insights from noisy data. What are some of the interesting trends you observe in the way that fixed income desks use pre- and post-trade analytics?
Grant Adams – Pre- and post-trade analytics have always been very important for investors to help determine what to trade and when. Traditional trading protocols say 10 to 15 years ago were voice trading and request for quote i.e. RFQ. And clients would tend to trade their block sizes via voice and smaller orders via RFQ. Recent analytics show that clients are shifting more block size orders to RFQs, and are still getting quality liquidity. For RFQs specifically, Tradeweb has a number of responses predictor, which we call Tradestack. Tradestack can be consumed in various different ways, helping clients become much more comfortable in taking part in this trend of shifting protocols. Additionally, with the somewhat recent popularity of portfolio trading (PT), clients are looking for clarity regarding when to use the RFQ protocol versus the portfolio trading protocol. And Tradeweb has pre-trade analytics to help investors determine which would give them the best execution.
Josephine Gallagher – And so how is this data being used to inform protocol selection?
Grant Adams – Traders typically ask themselves various different questions before determining what protocol to use, i.e. how big is my order list in terms of notional and number of line items. Do I want to face one counterparty? Or am I okay facing multiple counterparties? What does the estimated liquidity of the bonds on my list look like? Do they want the quotes pegged to a composite of their choosing? Or are they okay with getting quotes on each individual line item. Once clients answer some of these questions themselves, they will then typically use Tradeweb’s pre-trade transaction cost analysis tool, PTCA, which can help provide estimated execution for both the PT and RFQ protocols. And we do it in a very nice, concise package which allows traders to easily see where they’re going to get the best execution for their orders.
Josephine Gallagher – How important is this pre- and post-trade data and being able to support that feedback loop between traders and PMs (portfolio managers)?
Grant Adams – So the emergence of the PTCA tool lets traders be further involved with the portfolio management process overall. As the information they pull helps PMs determine estimated execution in a real time manner. So for instance, you might see a trader run PTCAs multiple times over a couple of days to help them determine when and how to trade. Post trade, TCA analysis allows traders to show portfolio managers how the execution played out versus what was expected pre trade, which can help shape future decisions about which protocol choice to use between RFQ and portfolio trade going forward. Furthermore, Tradeweb recently developed a PT optimizer tool where users can tweak numerous variables to help create a list of bonds optimized to the characteristics of their choosing, whether it’s yield, spread, or liquidity score, then traders are sharing this information with their PMs, again, helping them determine how and when the trade. So overall, I would say the clients are using all of this information to enhance internal conversations so they can make smarter choices.
Josephine Gallagher – There are difficulties in measuring fixed income TCA because the asset classes, nuances and data gaps, what is Tradeweb’s methodology and how do you overcome this?
Grant Adams – So our PTCA takes into account the individual user and firm when providing information. So what you see is unique to you. Tradeweb has a market-leading composite called AI price that provides a bid, mid and offer taking current market conditions into account. And this is applicable across many different asset classes at Tradeweb. This composite is used as a base for determining where execution will be when running the actual report. So our sophisticated TCA offerings utilize AI price to help determine the percentage of bid-offer spread that could be captured versus an estimated execution for pre-trade and versus actual execution for post trade, I would say the biggest difficulties for TCA and composites in general come during times of extreme volatility.
Josephine Gallagher – What can we expect for 2026? Where do you see the greatest potential for growth in terms of protocol development or data analytics?
Grant Adams – So one thing Tradeweb does very well is listen to client feedback and put the request into action. It’s hard to determine exactly where 2026 will take us, but we continue to hear interest on various topics, such as the ability to include multiple assets classes on a single portfolio trading ticket. So whether you’re trading the actual bond or an ETF or an index derivative, people are asking for Tradeweb to develop a tool to do that on a single ticket, allowing for non-traditional liquidity providers to participate in providing liquidity on portfolio trades is something that we’re hearing a lot of interest on in the marketplace. Also, a lot of folks are asking us to come up with AI tools to help with trading ideas and decisions as well.
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