BlackRock to Bring Tradeweb Liquidity into Aladdin Portal

BlackRock formed a strategic alliance with Tradeweb LLC to create electronic trading solutions seeking to boost liquidity in the rates and derivatives markets.

The alliance announced on Wednesday will integrate the Tradeweb fixed-income marketplace with the Aladdin Trading Network, a liquidity portal within Aladdin, the firm’s enterprise investment and risk system. It will fuse the two environments through a combination of order management, pricing and execution tools that help clients recognize trading opportunities, according to the announcement.

“A user will have direct access within Aladdin to pricing and liquidity information via Tradeweb and ultimately a more streamlined and integrated workflows so they can perform their jobs and execute trades directly through Aladdin,” said Sudhir Nair, incoming Global Head of the Aladdin Business in an interview.

The initiative will enable BlackRock to create a more integrated electronic trading experience for the Aladdin community of users, comprised of BlackRock, the world’s largest money manager and BlackRock Solutions’ institutional clients.

Buy-side traders using Aladdin will gain access to Tradeweb’s pricing from over 40 liquidity providers through ATN, which leverages connectivity to aggregate external liquidity and integrate the marketplace within Aladdin’s tools.

Any client that uses Aladdin, an enterprise system with built-in risk capabilities, has access to the order management and execution management system (OMS/EMS) within Aladdin.

BlackRock formed a similar alliance last year with MarketAxess, the major trading venue in U.S. corporate bonds. The difference is that alliance with MarketAxess is about establishing a protocol for Open Trading within the U.S. credit markets, said Nair. The alliance with Tradeweb is on bringing pricing and content into Aladdin and streamlining workflow, he said. The dynamic is specific to each of the markets, he said.

But in both cases, BlackRock is looking to connect its liquidity portal to electronic trading venues with major sell-side liquidity providers.

As the world’s largest money manager, overseeing $4.3 trillion in assets under management, BlackRock is faced with a more difficult environment for sourcing liquidity in fixed income due to regulatory changes and capital rules imposed on dealers. Sell-side firms have also shut down their proprietary trading desks in the wake of the Volcker Rule, dampening liquidity further.

Most of the trading in interest rate derivatives is now required to take place on regulated electronic platforms known as swap execution facilities. Tradeweb operates a SEF in rates with network of sell-side firms acting as liquidity providers.

Pulling in liquidity from Tradeweb’s network of sell-side participants will give Aladdin’s users access to a wide range of rates and derivatives markets including U.S. Treasury bonds and agencies, mortgages, European, Japanese and Australian government, as well as interest rate swaps.

“We’ve partnered with BlackRock to help automate the trade workflow for their Aladdin clients trading rates products,” said Lee Olesky, CEO of Tradweb in a statement. Both firms have a strong mutual client list, said Nair. “To the extent that we work together to make it easier to use Aladdin to access Tradeweb content and trading opportunities, we believe it will be better for mutual clients,” he said.

While the Aladdin community is already connected to Tradeweb and already has the ability to go out to them, Nair said, “the differentiator here is that the new initiative will bring information into the Aladdin dashboard, making it part of the community so that [users] don’t have to leave and open multiple screens to do these actions,” he said. The primary user within each one of the organizations would be the buy-side trading desk which is ultimately trying to find the right liquidity, said Nair. They will not pay extra for it; it is part of the offering.

Currently, the integration of ATN and Tradeweb is in progress, said Nair. What’s more, he didn’t rule out the possibility of BlackRock forming additional alliances. “Potentially as we continue to build out ATN, we will continue to look for trading opportunities to enrich its place as a liquidity portal,” he said.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio