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Inter-dealer broker Tradition and investment bank Nomura have teamed up to launch a new fully electronic multilateral trading platform designed to enhance the way exchange traded funds (ETFs) are traded.
The platform, called Navesis-ETF, is a joint venture between the two companies and combines Tradition’s proprietary technology and experience in over-the-counter trading with Nomura’s insight as a leading ETF market maker and authorised participant.
Navesis-ETF has been designed to increase transparency and efficiency, boost market liquidity, reduce costs and be fully regulatory-compliant, and works by allowing market participants, including institutional traders, sell-side banks and market makers, to engage in intra-day and auction trading; referencing net asset value (NAV) prices in the ETF primary market, with cross asset-class coverage, for the first time.
The platform creates a common market place that hopes to transform the current creation and redemption process, enabling market participants to fulfil NAV-based ETF orders in real-time, transparently, and at competitive prices.
Alternative equity-trading platforms emerged after new rules in 2007 facilitated their creation. Existing platforms, such as Chi-X and BATS Europe, now compete with traditional exchanges such as the London Stock Exchange, NYSE Euronext and Deutsche Boerse, and have helped drive costs and trading fees lower.
Rupert Hodges, Managing Director at Tradition, commented: “Navesis-ETF represents an important step-change in the future of ETF trading. It has been developed in conjunction with Nomura to specifically tackle market inefficiencies and we believe it will help to grow liquidity, increase transparency, and be seen as a positive industry initiative ahead of regulatory reform on both sides of the Atlantic.
“This initiative is completely in line with the Tradition’s global strategy of developing platforms and solutions with our core client base, designed to enhance liquidity, transparency and efficiency. Navesis-ETF demonstrates great technical innovation in a climate of regulatory change.”
Lee Burrows, Head of Delta One (EMEA) at Nomura, added: “The ETF industry has enjoyed a rapid ascent over the past 10 years, but structural inefficiencies have meant that the market has not reached its true potential.
“As leaders in liquidity management, and as a large player in the ETF market, we know from first-hand experience that Navesis-ETF fulfils the desires of participants and regulators. This is the first of its kind to market and will be a leading provider in the space. We expect this to become the primary market place for ETF trading.”