Hedge funds grabbed 60% of UK government bond trading volumes on Tradeweb’s electronic platform during January and February 2025. That’s the highest share in five years, and it’s climbing fast.
The figure was roughly 53% at the end of 2023.
The leverage question
The major macro funds active in this space include Brevan Howard, Capula Investment Management, Millennium Management, and Rokos Capital Management. These firms employ repo financing to execute basis trades, inflation bets, and trend-following positions, often against 10-year gilts.
Basis trades involve exploiting tiny price differences between cash bonds and their futures equivalents. The profits on each trade are minuscule, so the math only works with enormous leverage.
