Tradeweb Markets, a leading global provider of over-the-counter (OTC) trading platforms, has launched a marketplace for US-listed exchange-traded funds. The move aims to serve the growing demand for ETFs from institutional investors whose sizeable orders benefit from the greater pre-trade transparency and larger liquidity of a well-functioning OTC market compared to a traditional exchange.
Enrico Bruni, Managing Director and Head of the Europe and Asia business at Tradeweb.
Enrico Bruni, Managing Director and Head of Europe and Asia Business at Tradeweb Markets, commented: “We have introduced a very efficient way of trading US-listed ETFs electronically, leveraging our technology and network to support a competitive and liquid over-the-counter marketplace. Building on the success and growth of our European ETF platform, we’re pleased to offer our institutional clients a new level of transparency, flexibility and efficiency in the way they trade US-listed ETFs.”
“The Tradeweb ETF platform offers a new channel for liquidity and enhances our suite of execution capabilities,” added Chris Hempstead, head of ETF sales for KCG. “The platform represents a novel approach to improving price discovery as well as an innovative way to execute larger-size trades, while reducing the risk of materially impacting pricing.”
The benefits of the new US ETF marketplace includes access to all US-listed ETFs, the participation of 11 liquidity providers to enhance competitive pricing, aggregated pre-trade price transparency, instant availability of national best bid and offer prices, and request-for-quote trading with up to five dealers in both one- and two-way price quotes. In addition, the service is able to connect to third-party and proprietary systems, and records all transactions to conduct ongoing analysis of best execution and compliance.
“Leveraging electronic solutions to streamline OTC workflows is an important step forward for the ETF industry,” said Leland Clemons, Managing Director at BlackRock iShares. “The combination of a robust exchange traded marketplace with an electronic, transparent OTC market delivers institutional investors choice in how they access liquidity. Building on the success of their European platform, we see the new Tradeweb US ETF platform as a further example of how industry leaders are embedding the ETF technology at the heart of their innovation and growth agendas.”
TradeWeb will be aiming to replicate the success of their European ETF marketplace which supports approximately 45% of OTC electronic ETF trading in Europe with average daily trading volume in excess of €500m. The firm reports that more than 90% of trades in the second half of 2015 were executed within the best bid-offer prices from exchanges and maintaining this efficiency will be key in attracting large institutional clients to their US ETF platform.