Tradeweb Markets ETF CCP service is expected to be available by the fourth quarter of 2019, subject to regulatory approvals.
Tradeweb Markets partnered with EuroCCP, Europe’s leading equities clearing house, to facilitate central counterparty clearing for European Exchange Traded Funds (ETFs), which will help streamline European clients’ settlement process and minimise costs, by facilitating pre-settle margin and netting of exposures. It will still offer pan-European ETF investors the transparency afforded by the RFQ process.
Making EuroCCP’s central clearing and settlement services available through Tradeweb’s trading workflow should add value to market participants who look to navigate these new rules and mitigate counterparty risk for clearing participants.
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 minimise 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 at 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.
Jason Warr, Head of Global Markets at BlackRock iShares, commented: “Introducing CCPs to ETF trading on Tradeweb’s RFQ platforms is an important market structure enhancement, improving the clearing, settlement and utility of ETFs.”.
The trading industry in Europe expects to see new regulatory requirements under the European Central Securities Depositories Regulation (CSDR) to come into effect soon. This will force market participants to new Settlement Discipline procedures, including cash penalties for settlement fails and mandatory buy-ins.
Tradeweb’s ETF trading platform was launched in 2012 and saw its July trade volumes in European ETFs rising 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).
