Tradeweb Markets has launched a tool that makes it easier and faster to source, price and trade the basket of underlying bonds needed to create or redeem shares in fixed income exchange-traded funds (ETFs).

The recent growth in demand for European fixed income ETFs has created a need for an electronic trading solution that streamlines this process. The functionality will support trading on a wide range of bonds, and clients can access a variety of price feeds to value each basket, ultimately improving efficiency and liquidity.

It enhances the industry-leading “list functionality” already available for cash bond asset classes on Tradeweb by making it possible for users to source ETF basket constituents and weightings and then simultaneously price and trade the bonds.

The new capability provides users with all the operational efficiencies and error reduction benefits inherent in electronic trading.

“Our continued focus on innovation and ongoing dialogue with our clients has been fundamental in helping us to shape this solution,” said Enrico Bruni, head of the Europe and Asia business at Tradeweb. “This is a great example of how we can effectively combine technology, industry insight, and our breadth of coverage to address this specific market requirement in a way that will benefit the whole European ETF industry.”

Tradeweb worked closely with iShares, the ETF platform of BlackRock, to design a tool to increase efficiency and liquidity for fixed income ETFs across Europe in support of continued market growth.

“We’ve experienced a significant increase in demand for fixed income ETFs over the past few years and with this has come the need for more efficient ways to price and source bond baskets,” said Leland Clemons, head of capital markets EMEA at iShares. “Collaboration with Tradeweb brings to the ETF market the combined benefits of dealer expertise in pricing these securities and the operational ease of an electronic platform.”

Separately, iShares has launched two currency-hedged global fixed income ETFs on the London Stock Exchange, which reduce the effects of currency fluctuations on investment returns.

The two physically-replicated, monthly currency-hedged fixed income funds, the first of their type from iShares, aim to reduce the impact currency fluctuations can have on returns when investing in fixed income globally.

“We’re seeing a long-term trend for investors to diversify their fixed income allocations globally whilst at the same time there’s also been heightened volatility in FX markets,” said Stephen Cohen, head of investment strategy at iShares EMEA. “These factors are creating demand for simple and effective currency hedged solutions and we’ve designed these new funds with this client need in mind.”

The Tradeweb ETF hedging tool supports trading on European government, corporate, and covered bonds, SSA (supranational, sovereigns and agencies), U.S. treasuries and JGBs. Users can request prices from several liquidity providers simultaneously and trade multiple line items at once. Several calculations will be available to value the baskets, including volume weighted average price (VWAP), total principal proceeds (TPP) and total net proceeds (TNP). Tradeweb launched its ETF trading platform in 2012.