Blog · Coverage and territory · Trading
The honest answer to what hit ratio a sales trading desk should run: the 20 to 40 percent figures quoted on credit and rates desks depend on the product, on whether the ratio is by inquiry count or by size, and on the client mix, because a desk that is in competition on every inquiry from a large client will run lower than one that sees only the inquiries it is likely to win. This page gives the ranges by product, the three measurable things that set the right figure for one desk, and the table to compute before anyone quotes a percentage.
Hit ratio is trades done over inquiries received, and on a trading desk the question is what the quotient should be. It depends on the product, the weighting and the client, and each is on the desk's own data.
| Product, channel | Hit ratio by count, typical |
|---|---|
| IG credit, electronic RFQ | 15 to 25 percent |
| IG credit, voice | 30 to 45 percent |
| HY credit, voice | 35 to 50 percent |
| Rates, electronic | 18 to 30 percent |
| Rates, voice | 30 to 45 percent |
| FX, electronic | 20 to 35 percent |
| EM, voice | 35 to 55 percent |
The width inside each row is mostly client mix.
Hit ratio = inquiries traded ÷ inquiries received, per product, per channel, over a stated period
A desk that reports one number across voice and electronic reports an average of two different competitions. Split them, and compare each to its own prior period.
Size-weighted hit ratio = notional traded ÷ notional inquired
| Client | Inquiries | Traded | By count | Notional inquired | Notional traded | By size |
|---|---|---|---|---|---|---|
| X | 40 | 18 | 45% | $400m | $32m | 8% |
| Y | 20 | 6 | 30% | $200m | $70m | 35% |
X looks like the better client by count and is the price-checker by size. The size-weighted hit ratio piece and the worked example on ten inquiries compute both.
| Client | This quarter | Last quarter | Prior year | Inquiries this quarter |
|---|---|---|---|---|
| X | 45% | 44% | 42% | 40 |
| Y | 30% | 38% | 41% | 20 |
| Z | 22% | 24% | 23% | 60 |
Y is down eleven points against itself with inquiries steady. That is the row, whatever the desk average does. The client tiering piece uses the same table to decide where the desk's effort goes.
| Measure | Formula | From |
|---|---|---|
| Hit ratio by count | Traded ÷ inquired, per client, product, channel | Inquiry log and blotter |
| Hit ratio by size | Notional traded ÷ notional inquired | Same |
| Inquiry count | Inquiries per client per period | Inquiry log |
| Change vs prior period, per client | Ratio now − ratio then | Same |
| Margin on trades won | From the blotter, per client | Blotter |
| Identity | Inquiries = traded + passed + lost + no quote | Inquiry log |
The identity is the check that the inquiry log is complete: a desk that logs only the inquiries it quoted on has a hit ratio on the inquiries it chose to count.
Voice and electronic blended. A number that is neither.
Count only. The price-checker at the top of the client list.
Desk average only. Y's slide invisible.
Inquiries not all logged. A ratio on the desk's own selection.
A good hit ratio is one computed per product and channel, by count and by size, per client against the client's own history, with the inquiry log complete. Electronic desks in liquid products at 20 to 25 and voice desks at 35 to 45 are in normal range; the per-client size-weighted table is where the desk's next quarter is. Covirage computes it from the inquiry log and the blotter each week with the identity checked.
Because an electronic RFQ goes to five dealers at once and one wins. Twenty percent is the arithmetic of five in competition, and a desk at 25 is winning more than its share. A voice inquiry often goes to two dealers, and 40 percent is the same arithmetic. The ratio is comparable only within a channel.
No. A desk can raise its hit ratio by quoting aggressively and losing money on what it wins, or by declining to quote anything it might lose. Hit ratio beside inquiry count, quoted volume and the margin on trades won is the read. A ratio rising while inquiries fall is a desk that is being shown less.
Which clients are showing the desk real interest and which are using it for a price check. A client at 45 percent by count and 8 percent by size is trading the small tickets with the desk and the large ones elsewhere. That is a conversation, and the size-weighted piece on this site works it.