Understanding IG Market Share Data: What TRACE is Showing Beneath the Surface

As market participants review month-end U.S. investment grade (IG) credit volumes, one question has become increasingly common: Why has TRACE-reported activity grown faster than the market share captured by electronic platforms, including Tradeweb?

The answer is not a slowdown in electronification. It is a measurement issue driven by the way certain affiliate and back-to-back transactions are reported to TRACE.

That distinction matters. While headline TRACE volume remains an important benchmark, it can include activity that is not economically distinct or addressable by electronic trading platforms.

A closer look at what's driving TRACE growth

A growing share of reported IG TRACE volume appears to come from same-day, same-price, and same-security transactions between affiliated broker-dealers that are paired with a corresponding client transaction. In practice, this can create two public TRACE prints associated with a single underlying economic transaction.

This is not a criticism of those firms or their role in the market. The growth of non-bank and other non-traditional liquidity providers has been a positive development for competition, liquidity, and client choice. This issue is narrower: the reporting framework can make certain internal risk transfers appear as incremental market activity even though they are more accurately understood as part of the same economic transaction.

The result is a modest inflation of reported market activity. In the first quarter of 2024, these duplicate trades accounted for roughly 3% of total IG TRACE volume. By the first quarter of 2026, that figure had exceeded 9%, with matched dealer-to-dealer (D2D) and dealer-to-affiliate (D2A) volumes reaching approximately $125 billion in March 2026 alone. That change is meaningful enough to affect how market share figures should be interpreted.

Why this matters for electronic market share

For electronic trading platforms, this duplicate volume can distort the denominator used in market share calculations. These trades are included in TRACE-reported market volume, but the affiliate leg is generally not addressable by a trading platform. As a result, reported platform share can appear lower even when client electronic adoption is stable or growing.

Our analysis suggests this effect understated Tradeweb's fully electronic IG market share by approximately one percentage point in early 2024, widening to roughly two percentage points by early 2026.

In other words, if electronic share appears flat or only modestly higher in a given month, part of the explanation may simply be denominator growth driven by affiliate or back-to-back reporting mechanics rather than any change in client behavior.

Regulatory momentum: FINRA's proposed rule change

The good news is that regulators have recognized this issue and are taking action.

FINRA has filed a proposed rule change (SR-FINRA-2026-009) that would expand the existing non-member affiliate principal transaction indicator to include transactions between member affiliates. In practical terms, this would allow same-day, same-price, same-security back-to-back trades between affiliated broker-dealers - the very type of duplicate activity described above - to be identified and, where appropriate, suppressed from public TRACE dissemination, just as similar trades with non-member affiliates already are today.

FINRA's analysis found that approximately 5.7% of corporate bond transactions (including agency debt, ELNs, and foreign sovereign debt) in 2025 met these criteria. Industry commenters have supported the change, noting that public dissemination of these trades produces duplicative information that is not useful for pricing, valuation, or risk purposes.

The SEC published a notice of the filing in May 2026, and in June 2026, designated a longer period for Commission action. That means the proposal is under active regulatory consideration this year, but it has not yet been finalized. If approved, this rule change would help TRACE-reported volumes more closely reflect economically distinct market activity, providing market participants with a clearer view of electronic trading penetration.

Separating signal from the noise

Taken together, these dynamics suggest that headline TRACE data should be interpreted with appropriate context. TRACE remains a vital source of market transparency, but market structure has evolved, and reporting conventions can influence how headline market share statistics are interpreted.

This is a measurement issue, not an adoption issue. The underlying drivers of electronification in U.S. credit markets remain firmly intact: clients continue to adopt electronic protocols, trading volumes are increasing, and the range of products traded electronically continues to expand.

When adjusted for duplicate activity, the picture becomes even clearer: electronification is not just intact; it is stronger than headline figures suggest.

Putting the TAM discussion in context

If nearly 10% of reported IG market volume is effectively non-capturable, then raw TRACE volume may overstate the practical addressable market in any given month. But framing this as a "shrinking TAM" misses the bigger picture.

The U.S. investment-grade credit market has expanded dramatically over the past decade. Total U.S. corporate bond average daily trading volume (investment grade and high yield combined) was roughly $24 billion in 2012. By 2025, investment grade bonds alone averaged nearly $40 billion per day, and that figure climbed to roughly $50 billion in the first quarter of 2026.

Even after adjusting for duplicate activity, today's credit market is materially larger than it was a decade ago. Participants are competing for share of a much larger pool of real, economically distinct trading activity. That is the more meaningful lens through which to assess the trajectory of electronic trading.

A note on high yield

This dynamic is far less pronounced in U.S. high yield, where duplicate or economically linked trades of this type remain at approximately 2% to 3% of reported volumes. We continue to monitor this closely, but for now, the distortion appears to be primarily an investment grade phenomenon.

Looking ahead

Markets evolve, and the growth of non-traditional liquidity providers has been a constructive development for U.S. credit. The reporting infrastructure is now evolving as well. In the meantime, market share analysis should distinguish between headline TRACE volume and economically distinct, addressable trading activity.

The key takeaway is straightforward: look beyond the headline TRACE numbers. Underlying client behavior, trading volumes, and protocol adoption all continue to point toward robust and accelerating electronification. The denominator is the source of the distortion, not the underlying client demand for electronic trading.

If TRACE reporting evolves to better account for these types of trades, as it appears poised to do, the public data should move closer to reflecting the way the market is already functioning.

About Tradeweb Markets

Tradeweb Markets Inc. (Nasdaq: TW) is a leading global operator of electronic marketplaces for rates, credit, equities and money markets. Founded in 1996, Tradeweb provides access to markets, data and analytics, electronic trading, straight-through-processing and reporting for more than 50 products to clients in the institutional, wholesale, retail and corporates markets. Advanced technologies developed by Tradeweb enhance price discovery, order execution and trade workflows while allowing for greater scale and helping to reduce risks in client trading operations. Tradeweb serves more than 3,000 clients in more than 85 countries. On average, Tradeweb facilitated more than $2.8 trillion in notional value traded per day over the past four fiscal quarters. For more information, please go to https://www.tradeweb.com.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, our partnerships and collaborations, potential future offerings, future performance, 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. While we believe 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 the documents of Tradeweb Markets Inc. on file with or furnished to the SEC, may cause our actual results, performance or achievements to differ materially from those expressed or implied by 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 release are not guarantees of future events or performance and future events, 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 release. In addition, even if future events, 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 contained in this release, they may not be predictive of events, results or developments in future periods. Any forward-looking statement that we make in this release speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to 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 release.