Tradeweb Partners with EuroCCP on ETFs
Tradeweb Markets Inc., a leading global operator of electronic marketplaces for rates, credit, equities, and money markets, and EuroCCP, Europe’s leading equities clearing house, today announced a strategic collaboration to facilitate central counterparty clearing for European Exchange Traded Funds (ETFs).
This collaboration will help streamline European clients’ settlement process and minimize costs, by facilitating pre-settle margin and netting of exposures — while still offering pan-European ETF investors the transparency and benefits afforded by the RFQ process.
“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,” said Enrico Bruni, head of Europe and Asia business at Tradeweb. “As a leader in the ETF marketplace, we remain fully committed to innovative client solutions, and we are excited about this new initiative.”
With regulators aiming to harmonize rules under the European Central Securities Depositories Regulation (CSDR), market participants will soon be subject to new Settlement Discipline procedures, including cash penalties for settlement fails and mandatory buy-ins. By offering access to central clearing and settlement services via EuroCCP within the trading workflow, Tradeweb will help clients navigate these new rules and mitigate counterparty risk for clearing participants.
Cécile Nagel, CEO, EuroCCP said: “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.”
“Introducing CCPs to ETF trading on Tradeweb’s RFQ platforms is an important market structure enhancement, improving the clearing, settlement and utility of ETFs,” said Jason Warr, Head of Global Markets at BlackRock iShares.
Tradeweb launched its European ETF trading platform in 2012 and its U.S. ETF trading platform in 2016. In August 2019, Tradeweb announced July trade volumes in European ETFs had risen by 55.2% Y-O-Y to reach a record figure of $1.5bn per day. As of June 30, 2019, over 60% of European ETF transactions were processed via Tradeweb’s Automated Intelligent Execution Tool (AiEX).
Tradeweb’s global ETF marketplaces deliver an alternative method for investment firms to access competitive OTC prices with greater efficiency and transparency. The platforms offer a number of tools that reduce errors and improve performance while streamlining post-trade processing and providing reports that help institutional investors meet their best execution requirements. Tradeweb’s ETF CCP service is expected to be available by the fourth quarter of 2019, subject to regulatory approvals.
Phase 5 of the uncleared margin rules (UMR) took effect from September 2021.
Temporary equivalence is set to expire on June 30 2022.
IRS trading volumes have fragmented without an equivalence agreement.
Phase 5 of the uncleared margin rules came into effect on 1 September.
Triparty repos can be executed across U.S. Treasury securities to central clearing.