New York-based investment management firm J & W Seligman and Co. is moving into electronic bond trading with the TradeWeb multi-dealer system. Seligman was previously executing its U.S. Treasury trades manually and plans to go live with the TradeWeb system via the Internet within the next month.
"Electronic trading is the future of this business, " says Gary Zeltzer, senior vice president at Seligman, which manages around $35 billion. "Eventually we're going to get down to T+1 settlement and if you don't have this done electronically, you're never going to be able to settle trades."
Zeltzer explains that the firm looked at several other systems, including State Street's BondConnect, but settled on TradeWeb because it offers access to multiple dealers and is easy to use and efficient. The multiple dealer system is something the buy side has been calling for in the bond market recently. At the Bond Market Association's conference last week, buy-side panelists set forth their vision for an electronic system to provide centralized information and greater price discovery in the historically less transparent debt market.
"Right now, to get a treasury executed I have to call three different dealers and ask them to bid or offer and then I hang up and they have to call me back," explains Zeltzer. "With TradeWeb you can punch in the specific security you want to bid or offer on and send it to five trading desks simultaneously and within 15 seconds you can get a trade done, the kind of time you save is incredible."
Zeltzer also says TradeWeb plans to expand its offerings to include agency and mortgage-backed instruments next year with corporates following later next year or the following year. "I like how the system works, what market places it covers and that they are going to continue to look at other areas," notes Zeltzer. He adds that Seligman is continuing to look at electronic systems that cover other areas of the bond market since no single system can trade all sectors.
The TradeWeb network includes 11 of the largest market makers in U.S. Treasuries, including Credit Suisse First Boston, Goldman Sachs, Lehman Brothers, Merrill Lynch, Salomon Brothers, J.P. Morgan, Chase Securities and Morgan Stanley Dean Witter, and offers access to price information and research along with real-time trading. TradeWeb, which is available through the Internet and through the Bridge private network, has more than 1,000 users in over 250 buy-side institutions and transacts over $2.5 billion per day on average.