Tradeweb is looking to use a combination of clearing partnerships and new functionality to boost electronic adoption of fixed income derivatives in the Asia Pacific, according to a senior executive.

The electronic trading pioneer, majority owned by LSE Group, has seen interest rate swaps (IRS) trading on its venues increasing as clearing mandates have been rolled out globally. Tradeweb reported in September a record month for trading, with 55% year-on-year increase in average daily notional volume to $2.21 trillion (£1.7tn). The firm’s head of emerging market interest rate derivatives told FOW Tradeweb plans to leverage that growth to develop further partnerships in the region.

“Asia is a huge continent comprising multiple financial markets, each with its own characteristics and maturity levels,” Andrea Sbalchiero said. “This creates fragmentation and liquidity issues, which e-trading can help address. Certain IRS currencies like the South Korean Won, Chinese Yuan or Indian Rupee tend to have strong liquidity but this is not necessarily the case for Taiwan Dollar or Thai Bhat, for example.

“We are also speaking with central counterparty (CCP) clearing houses and dealers to start supporting Malaysian Ringgit, when it becomes cleared. E-trading can help solve the inherent liquidity challenge, as well as execution inefficiencies for many emerging markets (EM) currencies.”

Speaking at the FOW Trading Singapore event last month, a panel of experts said the global rate cutting cycle will be positive for Asia Pacific (APAC) flows. The chief executive and head of listed derivatives at Kenanga Futures said moves in the Malaysian currency had provided an impetus for positioning from clients and an extension of an agreement to use CME Group’s electronic trading system. She said a rally after China unveiled a fresh stimulus package earlier in the month drove relative value-based positioning on the Bursa Malaysia Derivatives (BMD) market.

Patchy regulatory adoption in APAC has been a hindrance but there are signs derivatives trading obligations (DTOs) are beginning to have an impact as APAC’s clearing framework takes shape.

“Local policymakers rolled out clearing mandates in a host of jurisdictions, including Australia, China, Hong Kong, Korea and Singapore. Singapore already has a DTO that has been adapted to the local market, so it covers the dealer-to-dealer space and a smaller subset of instruments,” he added. “Hong Kong looked at implementing one but then decided to assess the DTO impact on jurisdictions with live regimes before making a final decision. Furthermore, Hong Kong and Japan were among the first to introduce trade reporting requirements more than 10 years ago.”

Tradeweb has a service called Automated Intelligent Execution (AiEX) aimed at increasing efficiency for high frequency and systematic traders, which has also helped adoption from clients.

“It streamlines the entire transaction experience, especially when executing systematic trading strategies. We see clients trading swaps with multiple line items within seconds, while minimising operational risks associated with voice trading,” Sbalchiero added. “AiEX has helped change attitudes to electronic workflows in APAC, where manual execution has been the norm for years. This is true not just for asset managers but also for new types of users such as sovereign wealth funds and hedge funds. We have, actually, been seeing more and more hedge funds opening systematic pods in recent years.”

Hong Kong Exchanges and Clearing (HKEX) introduced in May last year a Chinese swaps trading service. Swap Connect aims to support non-Chinese firms trading onshore Chinese swaps, known as Northbound, and Chinese firms trading swaps in Hong Kong (Southbound) but only the former is currently available. HKEX said Swap Connect traded a daily average of RMB14.2bn (£1.5bn) in August, a new record.

Tradeweb is looking to enhance its Swap Connect functionality, Sbalchiero added.

“Without a doubt, automation will continue to be a big theme in APAC, as clients are taking AiEX use cases to the next level, particularly hedge funds,” he said. “We are also enhancing our Swap Connect link in China by adding unwinds, after successfully implementing International Money Market (IMM) swaps in May. Last but not least, we see clients paying more attention to dealer streams, so we will work closely with liquidity providers to offer even better pre-trade transparency for buy-side customers.”

Speaking to FOW last month Glenda So, HKEX’s co-head of markets, said the ability to pledge China Interbank Bond Market securities to meet margin calls will boost the market further.