Tradeweb reports 20.3% increase in January ADV

NEW YORK - Tradeweb Markets Inc . (NASDAQ:TW), a prominent operator of electronic marketplaces with a market capitalization of $29.57 billion and an "GREAT" financial health score according to InvestingPro, has reported a significant year-over-year increase in average daily volume (ADV) for January 2025. The company recorded an ADV of $2.44 trillion, marking a 20.3% rise from the previous year. This growth comes despite the exclusion of the ICD acquisition impact, which still shows a 6.4% ADV increase year-over-year when adjusted.

The rise in U.S. government bond ADV, which saw a 14.3% increase to $232.1 billion, and European government bond ADV, up 16.5% to $58.4 billion, contributed to the robust performance in rates. This growth aligns with the company’s impressive 29.4% year-over-year revenue growth and strong liquidity position, as evidenced by a current ratio of 3.13. These figures reflect strong trading activities across institutional and wholesale client channels. Mortgage ADV also experienced a surge, up 21.1% year-over-year to $265.7 billion, driven by a spike in To-Be-Announced (TBA) activity and a record number of clients on the specified pool platform.

However, not all segments showed growth; swaps/swaptions ≥ 1-year ADV declined by 25.7% year-over-year to $439.2 billion, impacted by a drop in compression activity, which typically carries lower fees.

In the credit sector, U.S. electronic credit ADV increased by 5.0% to $7.5 billion, attributed to the growing adoption of Tradeweb’s trading protocols, while European credit ADV dipped by 3.9% to $2.4 billion, affected by market volatility. Municipal bonds and credit derivatives ADV saw upticks of 26.2% and 60.2% respectively, indicating heightened activity in these markets.

Equities presented a mixed picture, with U.S. ETF ADV down 15.7% to $8.5 billion but European ETF ADV up by 24.5% to $3.2 billion, reflecting varying market conditions and client adoption rates of automated trading protocols.

Money markets experienced strong growth, with repo ADV up 33.8% to $730.9 billion, fueled by increased client participation and market dynamics such as the unwinding of the Fed’s balance sheet in the U.S. Other money markets also saw an increase in ADV to $302.7 billion, partly due to the inclusion of ICD volumes.

Tradeweb’s performance in January underscores the diverse and dynamic nature of the electronic trading marketplace. The company’s ability to attract a wide client base and adapt to evolving market conditions is evident in the varied performance across different asset classes. While trading at a relatively high P/E ratio of 59.04, InvestingPro analysis suggests the stock is currently overvalued relative to its Fair Value. Investors seeking deeper insights can access comprehensive analysis and 8 additional ProTips through the detailed Pro Research Report, available as part of the InvestingPro subscription.

In other recent news, Tradeweb Markets Inc., a leading operator of electronic marketplaces, has received approval from the U.S. Securities and Exchange Commission (SEC) to operate its swap execution facility, TW SEF LLC, as a security-based swap execution facility. This development aligns with the newly established Regulation SE, which mandates platforms facilitating the trading of security-based swaps to register with the SEC. In 2024, TW SEF traded over $150 trillion, accounting for 52% of the industry-wide volume, and reported an average daily volume of over $590 billion.

Raymond (NSE:RYMD) James analyst Patrick O’Shaughnessy has upgraded the price target for Tradeweb Markets to $141 from $138, maintaining an Outperform rating on the company’s shares. This adjustment precedes Tradeweb’s announcement of its fourth-quarter earnings for 2024. O’Shaughnessy’s outlook is based on robust volumes and significant market share gains in key products.

In addition, Tradeweb reported a significant year-over-year increase in average daily volume for October 2024, marking a 34.1% rise compared to the same period last year. This growth was seen across various markets, including rates, credit, equities, and money markets. These are the latest developments in Tradeweb’s operations.

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