How hedge fund clients are pioneering sophisticated new automated trading strategies

By Jason Giunta, Managing Director, Head of Hedge Fund Sales, Tradeweb

New York, NY –News Direct– Tradeweb

Automated trading has emerged as a strategic advantage for a specific segment of the institutional marketplace, using it effectively in their systematic trading approaches. While this may not be the use case we envisioned back in 2012 when we launched Automated Intelligent Execution (AiEX), we are certainly energized as our hedge fund clients embrace the tool to innovate and potentially steer it in new directions.

This particular story involving AiEX evolution follows a similar trajectory that we have seen with technological development in other industries. Whether it’s the explosion of AI and algorithmic models made possible by the widespread availability of cloud-based computing, or the proliferation of offshoot businesses and marketing strategies that have grown up around social media, the full force of a technology not always ready until end users start experimenting with it. It’s also a classic example of what can happen when you put a reliable, flexible tool in the hands of some of the world’s most sophisticated dealers.

Traditionally, systematic execution strategies were primarily associated with stocks, with high-frequency trading and algorithmic strategies gaining ground. However, with advances in technology and sophisticated algorithms, automation has expanded its reach into asset classes that were historically challenging to navigate with automated strategies. This technological leap has paved the way for systematic equity-focused firms to diversify their strategies and venture into fixed income asset classes.

The rise in automation adoption in interest rate swaps is a prime example of the transformative impact technology has had on financial markets, enabling faster and adaptive trade execution. In addition, automated systems can continuously monitor and adjust trading parameters based on changing market conditions. As more systematic funds expand their reach into fixed income, leveraging automation allows them to implement proven strategies, optimize trading processes and exploit new opportunities across different asset classes.

Since the launch of AiEX, we have expanded our solution to 26 of our products to help our clients capitalize on strategic trading opportunities, increase their responsiveness to market conditions and streamline and accelerate their workflow.

Roots in efficiency

As a background, AiEX works by connecting a customer’s order management system (OMS) directly to the Tradeweb platform and fully automating the execution of a trade. At the basic level, the technology automatically applies pre-configured conditions, such as price tolerance thresholds, minimum number of offers required to trade and customer-specific compliance thresholds. The trade is then executed at the best price and sent back to the customer’s system.

In its earliest incarnations, AiEX was specifically marketed as a tool to free up traders’ time by automating low-touch trades in US Treasuries. Trade sizes were relatively small, volume was stable and trading workflows improved.

When AiEX first launched 11 years ago, trades were all executed using a request-for-quote (RFQ) trading protocol, where traders would nominate a predetermined number of dealers who would view the trade and make an offer, and when all relevant parameters were obtained, the trade would be executed. The corresponding audit trail would come along for the ride, giving traders evidence of best execution and all the relevant post-trade information they needed to comply with registries. The end result was that the tool worked as advertised. Trades were executed smoothly, compliance checks and balances were met and the so-called easy trades were able to be executed without much difficulty.

Trading efficiency for Trading Edge

However, it didn’t take long before some of our customers started to see a potentially higher demand for AiEX. As Tradeweb continued to develop the technology and added asset classes and new trading protocols such as click-to-trade and Request-for-Market (RFM) to the mix, its utility continued to grow. Meanwhile, as our hedge fund clients continued to refine their own workflows and learn from their experiences with AiEX, they began to dramatically expand the universe of applicable use cases where AiEX could unlock new value, specifically across global fixed income products.

As these clients began to refine their use of AiEX under different market conditions, they quickly found that they could implement different execution protocols in an automated manner. For example, during periods of market stress, they quickly found that by sending automated trades via RFM, versus RFQ, they were able to limit their footprint on the market and execute trades far more discreetly than ever before possible. RFM allows customers to ask dealers for a two-way market rather than a price based on direction. Unlike the RFQ, where customers seek price quotes from dealers, the RFM does not reveal the customer’s trading intentions, preventing potentially sensitive or strategically valuable information from being disclosed.

Similarly, clients using AiEX with our click-to-trade protocol began streaming trader liquidity directly into their internal trading systems and automating their trading strategies to execute streams at specific price thresholds, exposing the trade to only a single trader and reducing the market footprint.

Building a positive feedback loop

To continuously evaluate their own process and find areas for improvement, some of our most advanced clients quickly started using their AiEX post-trade data as a performance improvement tool. Over thousands of trades in different market conditions, using different trading protocols and different parameters, they were able to analyze results and start optimizing the whole process for different asset classes and trading environments. Suddenly, the tool originally conceived and perhaps undersold as an “integrated audit trail” became a data-driven guide to an optimal trading strategy.

Continuous innovation

Ultimately, what happens to AiEX shouldn’t come as a huge surprise. While it was never really our original intention to leverage the technology as a precision-tuned strategic execution engine, we put the pieces in place to make it happen. As we’ve seen in other parts of our business, the combination of a reliable product that delivers proven performance improvement, the flexibility to continually hone and refine that product, and working closely with customers to solve real-world use cases creates a recipe for eternal innovation.


Tradeweb’s philosophy is to work closely with clients to build new and improve existing trading technologies that deliver better price discovery and more efficient execution. We are unique among our peers in that we offer electronic marketplaces in rates, credit, equity and money markets. This means that we must meet a number of customer requirements and continue to develop innovative and flexible functionality that can be implemented across asset classes. The expansion of AiEX to improve execution in the hedge fund community has opened the door to different ways to generate alpha when implementing trading strategies.

About Tradeweb Markets

Tradeweb Markets Inc. (Nasdaq: TW) is a leading global operator of electronic marketplaces for quotes, credit, equity and money markets. Founded in 1996, Tradeweb provides access to markets, data and analytics, electronic trading, straight-through processing and reporting for more than 40 products to clients in the institutional, wholesale and retail markets. Advanced technologies developed by Tradeweb improve price discovery, order execution and trading workflows, while allowing for greater scale and helping to reduce risk in customer trading. Tradeweb serves approximately 2,500 customers in more than 65 countries. On average, Tradeweb facilitated more than $1.2 trillion in nominal value traded per day over the past four quarters. For more information, go to

Forward-looking statements

This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, our prospects and future results, the industry and markets in which we operate, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions and future events are forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. Although we believe that these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed under the heading “Risk Factors” in Tradeweb Markets Inc. documents filed with or furnished to the SEC, could cause our actual results, performance or performance to differ materially from those that is expressed or implied by the SEC. these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this announcement are not guarantees of future performance, and our actual results of operations, financial condition or liquidity, and the development of the industry and markets in which we operate may differ materially from the forward-looking statements contained. in this publication. In addition, although our results of operations, financial condition or liquidity and events in the industry and markets in which we operate are consistent with the forward-looking statements in this release, they may not be predictive of results or developments in future periods. Any forward-looking statement that we make in this announcement speaks only as of the date of such statement. Except as required by law, we undertake no obligation to update or revise or publicly announce any update or revision to any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this publication.

Contact Information

Trade web

Daniel Noonan

+1 646-767-4677

Company website

See source version at

Leave a Comment