Tradeweb has launched a feature on its Automated Intelligent Execution (AiEX) platform for European credit that lets users manually intervene when a trade fails to execute.

Chioma Okoye, managing director of European institutional credit at Tradeweb, says the enhancement enables clients to interact with trades that would otherwise be rejected to the order management system. Traders can now isolate what is preventing the trade from being executed and manage trade exceptions.

AiEX is a rules-based trading tool that allows users to set parameters for their orders. For example, a trader can specify how many dealers they want to reach out to, or the time for the proposed trade once quotes have been received from the dealers.

Prior to the roll-out of the new feature, users had to look at other ways of executing the trade, potentially going “fully manual” or switching to voice trading. With the enhancement, a trader can inspect the trades “in-flight”, even if, say, 20% of them are not meeting every single one of the trader’s parameters. “This is where the experience or the judgment of the human trader comes in to decide whether this is within the threshold,” Okoye says. 

Fixed income trading is edging closer towards electronification, promising greater transparency, and better price discovery and execution. However, there are often times where a human touch is unavoidable; for example, if a trade is very large or illiquid. Even with trades that are meant to be executed electronically, a trading system can throw up an exception, forcing the user to manually carry out the trade. Allowing traders a kind of manual override during the trading process, Okoye says, will help persuade them to embrace automation.

“There are certainly clients out there for whom this is the first time they feel really comfortable using automation, because there is still that ability to interact with and use their judgment to decide when they want to push all the way through or pull back, depending on what they are seeing in terms of which parameters don’t get met,” she says.   

Okoye adds that the enhancement will free up more time for traders to focus on more esoteric trades: “The more you can push through automation, the more time you have to focus on the stuff that requires a lot more attention from a human trader.”   

Nicola Danese, managing director and head of European fixed income at Tradeweb, says the feature’s “hybrid” aspect makes the process less, rather than more, manual. “It’s not necessarily more manual; it’s really a manual portion that was already there and managed completely independently that is now being brought [in] as part of the workflow to give the client better, seamless execution,” he says.  

It could also allow users to set better rules for trades by allowing visibility into why an order was not executed and how frequently an exception happens. Based on these observations, a trader could decide to change the parameters they have set on the platform. 

“You would have the ability within the user interface to view your parameters, see the one that maybe you set a little bit too tight for what you are trying to achieve, and then widen it,” Okoye says. “Literally, it could be down to market conditions for the next couple of weeks, [so] you need to be a little bit wider on it. And you can do that way more dynamically now, with the ability to see what the exception was in real-time, react to it, and adjust as the need arises.” 

Tradeweb originally introduced the functionality toward the end of 2018 for the US credit market, before launching it in European credit earlier this month. The reason for the gradual roll-out is the individual characteristics of each market and the different levels of AiEX adoption among clients for each product. In European credit, for instance, the need for more direct interaction with the order came as people looked to increase the size and liquidity of orders—some of which may need a last look from the trader. It was also necessary to incorporate the firm’s full range of smarter dealer-selection tools before deploying the feature in the space.

Danese says Tradeweb sees AiEX as a growth area, with opportunities to bring less-liquid securities and larger trade sizes onto the platform. However, it requires users to become comfortable with liquid securities and smaller trades first. He says giving people “more visibility, having maybe a user interface where you can see exactly what the rules are doing for you, interacting more seamlessly with the platform on exception management, are all things in our mind that will try to address that point.”