Over-the-counter (OTC) trading venue Tradeweb has partnered with equities clearing house EuroCCP to facilitate central counterparty clearing for ETFs traded on its European request-for-quote (RFQ) platform.
Enrico Bruni, Head of Europe and Asia Business at Tradeweb.
According to Tradeweb, the collaboration will help to streamline clients’ settlement process and minimize costs by facilitating pre-settle margin and netting of exposures.
The features are made possible while still offering ETF investors the transparency and benefits afforded by the RFQ process.
Tradeweb notes that market participants will soon be subject to new settlement discipline procedures, including cash penalties for settlement fails and mandatory buy-ins, under the rules of the European Central Securities Depositories Regulation (CSDR).
By offering access to central clearing and settlement services via EuroCCP within the trading workflow, Tradeweb aims to help clients navigate these new rules and mitigate counterparty risk for clearing participants.
Commenting on the initiative, Enrico Bruni, Head of Europe and Asia Business at Tradeweb, said: “By offering our clients the ability to centrally clear European ETF trades, we are enhancing the RFQ workflow by introducing a new post-trade process to help investors minimize settlement fails and improve efficiency.
“As a leader in the ETF marketplace, we remain fully committed to innovative client solutions, and we are excited about this new initiative.”
Cécile Nagel, CEO of EuroCCP, added, “Our partnership with Tradeweb allows us to expand our ETF clearing business, delivering a new and innovative service to clients which helps them to better manage the cost and risk of trading this asset class.”
Tradeweb has recorded robust growth in ETF trading volumes since launching in Europe in 2012. Trading activity on its European ETF marketplace reached a record-breaking monthly total of €30.6 billion in July, up 55.2% year-over-year.
The central counterparty clearing service is expected to be available by the fourth quarter of 2019, subject to regulatory approvals.