Tradeweb reported a dramatic shift in its credit business during July, with credit derivatives trading volumes surging past cash credit for the first time. Credit derivatives average daily volume jumped 101.2 percent year-on-year to $21.1 billion, while cash credit ADV rose a more modest 6.6 percent to $18.9 billion. The surge was driven by heightened activity from hedge funds and systematic traders executing credit default swaps through swap execution facilities and multilateral trading facilities.
Total credit ADV reached $40 billion in July, up 41.7 percent year-on-year, with CDS workflows accounting for the bulk of growth. Within cash credit, US volumes increased 15.7 percent to $9.4 billion, supported by continued adoption of Request-for-Quote, Portfolio Trading, and Tradeweb AllTrade protocols. European credit volumes rose 4.7 percent to $3 billion.
The shift underscores growing institutional preference for derivatives-based credit exposure over traditional cash bond positions.
FXnCO Insight
Traders should monitor continued CDS volume growth as a potential leading indicator for credit market volatility and positioning shifts among systematic and hedge fund participants.
Source: Finance Magnates