Derivatives Trading Gets Buildouts

Tradeweb launches FX options trading platform.



Platform operators are building out trading infrastructures for new asset classes as the regulatory environment shifts toward central execution and clearing.



Tradeweb Markets has introduced an electronic, multi-dealer-to-customer trading platform for FX options, the fourth derivatives marketplace to have been launched by Tradeweb.



The new platform enables options trading on major currencies and allows buy-side investors to request quotes from several dealers simultaneously.



Though global financial reform is still evolving, it is likely that the majority of derivatives will be traded electronically and cleared in the new regulatory environment,” Enrico Bruni, head of European markets at Tradeweb, told Markets Media.
“However, uncertainty remains around the timing and specific changes that may be applied to the FX options market."



Tradeweb, which has operated electronic derivatives markets since 2005, has dedicated itself to support market participants’ transition to this new trading paradigm while bringing additional transparency and more efficiency to the derivatives marketplace.



The Tradeweb derivatives offering consists of four separate marketplaces, including interest rate swaps, credit default swap indices, equity derivatives, and FX options. Each platform leverages the same technology infrastructure and uses request-for-quote (RFQ) and/or request for stream (RFS) electronic trading protocols, but is tailored to the characteristics of each type of derivative.



“Though the future regulatory environment remains uncertain, Tradeweb’s flexible platforms provide market participants with the elasticity they need to adapt to new financial reform,” said Bruni.



Users of the Tradeweb FX options platform can trade outright plain vanilla currency options or multi-leg strategies on a live or delta-exchange basis. The platform utilizes the multi-dealer request-for-quote (RFQ) trading protocol pioneered by Tradeweb for the fixed income markets, allowing clients to hold a real-time auction with multiple dealers.



“The Tradeweb derivatives offering consists of four separate marketplaces, including interest rate swaps, credit default swap indices, equity derivatives, and FX options,” Bruni said. “Each platform leverages the same technology infrastructure and uses request-for-quote [RFQ] and/or request for stream [RFS] electronic trading protocols, but is tailored to the characteristics of each type of derivative.”



The platform provides pre- and post-trade FIX integration, pre-trade allocation, and post-trade data feeds to improve and automate trade processing. “If clearing becomes a requirement in future, Tradeweb will seek to connect to relevant clearinghouses based on customer demand,” said Bruni.