Highlights:

• Derivatives Volumes Surge Following MiFID II: As new trading mandates under MiFID II governing European derivatives went into effect at the start of 2018, activity on multilateral trading facilities (MTFs) ramped up quickly, roughly doubling in each of the first three quarters of 2018.
• Chinese Bond Market Gets Ready for its Close-Up: China made significant moves to open up its markets to foreign investors in 2018. By August, China had eased or completely removed foreign ownership limits on a number of its key industries, including finance, mining, shipbuilding and aircraft manufacturing, culminating in, amongst other things, a new revolution in overseas trading in China’s bond market. By the end of November this year, more than $160 billion had been traded on China’s Bond Connect platform via Tradeweb, which was the first offshore trading venue to connect to the platform.
• Automated Trading Goes Mainstream: Year to date in 2018, 15.7% of all institutional mortgage and government bond, credit, and ETF tickets on Tradeweb was executed using its Automated Intelligent Execution (AiEX) technology, five times the amount of automated trading on the platform in 2014.
• Geopolitical Skirmishes Rattle Global Bond Markets: Global trade and budget disputes ranging from Brexit to the tense standoff between Italy’s coalition government and the European Commission progressed to their second, third and fourth acts. As fears of political gridlock climbed, bond markets reflected an increasingly guarded outlook.
• The End of the Era of Negative Interest Rates: This year saw a ‘normalization’ of monetary policy among many of the major central banks, which corresponded with multi-year high yields in benchmark 10-year bonds from the US, Germany, Japan, and the UK. The US Treasury 10-year led the pack, reaching a seven-year high of 3.23% in November 2018.

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