Tradeweb hopes to draw more retail investors to bond platform

Electronic trading firm sees benefits for advisers over using mutual funds

By Dan Jamieson

Dec 3, 2012 @ 4:15 pm (Updated 4:58 pm) EST

fixed income, trading, vanguard

Tradeweb Markets is looking to expand its retail presence in fixed-income markets with what it says is an expanded compliance and search capability for its retail bond-trading platform.

Some enhancements are being implemented as part of a new agreement with Vanguard Brokerage Services, said John Cahalane, head of Tradeweb Retail.

Clients of Vanguard's discount broker will now use Tradeweb Retail as their primary fixed-income trading system.

Mr. Cahalane also wants to see more advisers at independent broker-dealers and registered investment advisory firms use his system instead of mutual funds to build individual bond portfolios.

“With retail trades [of] less than $100,000, we think an electronic market makes sense,” he said. But the overall growth of the retail market “has been somewhat stagnant” because of low rates, Mr. Cahalane added.

Retail investors have gone into fixed-income funds because of the liquidity mutual funds provide, he said. “We think electronification will help bring the [bond] market out of the dark.”

The firm is rolling out some pre- and post-trade tools to provide better search capability, firmer pricing and compliance checks, Mr. Cahalane said. “From the view of an RIA or independent broker … tools like these allow you to act or participate in the market.”

Tradeweb hopes to roll out a direct service to RIA firms next year, with the firm possibly acting as a clearing broker between all trades, Mr. Cahalane said. Tradeweb now serves advisory firms through their custodians.

The dispersed RIA market “is probably the most underserved” in terms of fixed income, he said.

Tradeweb's institutional bond platform is still its largest unit.

Competitor BondDesk Group LLC is the largest player among retail brokers.

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