Tradeweb launches electronic trading platform for European-listed ETFs

Oct 24th, 2012 | By | Category: ETF and Index News

Tradeweb Markets has launched an electronic marketplace for trading European-listed exchange-traded funds (ETFs), through its regulated multilateral trading facility (MTF) operator Tradeweb Europe.

Tradeweb launches electronic platform for trading European-listed ETFs

Tradeweb’s new platform has been built to provide clients with greater efficiency and more competitive pricing for larger-sized over-the-counter ETF trades.

Tradeweb said its multi-dealer-to-customer platform had been built to provide clients with greater efficiency and more competitive pricing for larger-sized over-the-counter ETF trades.

The addition of ETFs builds upon Tradeweb’s range of leading electronic marketplaces for fixed income, derivatives and other products across the globe.

The initiative follows the joint venture announced in February this year between Nomura, the Asia-based investment bank, and Tradition, one of the world’s leading inter-dealer brokers.

The two companies partnered to create Navesis-ETF, an electronic ETF trading platform designed to increase transparency and efficiency, boost market liquidity and reduce costs. [See Tradition and Nomura launch Navesis-ETF trading platform for ETFs].

The launch of Tradeweb’s offering, which will likely compete alongside Navesis-ETF, reflects growing competition among rival trading locations to attract ETF trade flows as assets in the industry continue to boom.

Assets under management in the European ETF industry have increased on average by 39.6% annually over the last 10 years, and reached $309 billion in Q3 2012, according to independent research firm ETFGI. A significant proportion of these assets are traded over-the-counter due to the fragmented nature of the market.

Tradeweb has introduced its new platform to provide clients access to a consolidated pool of liquidity for the entire range of European-listed ETFs, while allowing them to put market makers into competition to get the best price.

Activity to date on the platform indicates that clients are benefiting from highly competitive prices in large notional size, an early indication of the suitability of Tradeweb’s electronic request-for-quote (RFQ) protocol for the ETF market. Eleven dealers are currently providing liquidity to the marketplace, which supports trading on a risk, closing NAV or agency basis.

“Proving best execution is increasingly important for our institutional client base and we expect that this requirement will continue to be a focus in upcoming MiFID II regulations. Electronic trading helps asset managers meet best execution requirements”, said Enrico Bruni, head of European markets at Tradeweb.

“The platform offers integrated trade processing and a number of functions, such as direction locking and identifier matching, that reduce the risk of errors and substantially improve efficiency”, commented Adriano Pace, Tradeweb’s director of equity derivatives.

Using the RFQ protocol pioneered by Tradeweb, clients can request quotes from multiple dealers and view all responses on one screen. Clients can allocate to sub-accounts pre- or post-trade and straight-through processing reduces manual errors and settlement problems.

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