Tradeweb Markets LLC aims to add greater transparency and security to the retail market with recent improvements to its retail platform and a new partnership with Vanguard Brokerage Services.

Tradeweb Retail, one of the four biggest alternative trading systems in the muni market, provides access to over 105,000 securities offerings from more than 175 dealers. New functions include tools to help clients with price discovery, security selection and transaction execution

"It's going to be difficult when you have a marketplace with 4 million outstanding municipal CUSIPs to find exactly the right bond for your investment need," said John Cahalane, managing director and head of Tradeweb Retail.

"What Tradeweb aims to do is build a better market, and we think creating tools for financial advisors and other clients that give them more certainty around their investment choice is necessary, particularly in the retail market."

Tradeweb's tools are technically applicable to multiple fixed income markets, but the need for price discovery and transparency tools is perhaps greatest for municipal bonds.

"Municipals are arguably one of the more opaque markets because of the number of outstanding CUSIPs and the small transaction size that deals are issued in," Cahalane said. "It tends to create a somewhat illiquid marketplace which is more difficult to traverse for investors and financial advisors."

CUSIP numbers are used to identify individual securities.

To increase price discovery and security, Tradeweb has developed tools to compare bond prices to historical trades, compiled from Municipal Securities Rulemaking Board data, as well as to current prices.

Cahalane explained that Tradeweb uses a pricing service to evaluate the price of a bond. Then, using algorithms, it can compare that bond to 10 or 15 other securities in the marketplace that are similar in characteristics.

"The goal is to give, whether it's the client or a financial advisor, a greater sense of security and confidence that the instrument they're selecting is, in fact, best for them based on the criteria they're putting into the system," Cahalane said, adding that they've been working on the new tool for the past 18 months.

The company did a test-launch of the new tools in August, and officially launched in December, when they also announced their partnership with Vanguard. 

Tradeweb worked with Vanguard to build out a streamlined client-focused interface that seamlessly fits on the website.

"Vanguard Brokerage Services is always looking to lower the cost and complexity of investing for our clients," said Vanguard principal and head of Investor Trading Services, Brian McCarthy.

"Working with Tradeweb has exceeded our expectations — they continue to partner with us to provide enhanced tools and functionality for our clients including a new U.S. municipal bond calendar, dynamic bond laddering capabilities, and additional bond analytics."

McCarthy said that, since launching the new platform, initial feedback from clients has been positive.

Going forward in the muni market, Cahalane believes there is going to be a greater focus on protecting the individual investor and bringing them more transparency and information.

"The fact that people can't easily access a bond price on their iPad like they can in equities is something that I think is going to be changing in the next few years," he said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.