Electronic fixed-income trading-platform operator Tradeweb has added support for over-the-counter trading of U.S.-listed exchange-traded funds.
The new functionality complements Tradeweb’s 2012 launch of European-listed ETF trading and was a customer-driven decision, noted Adam Gould, head of U.S. equities derivatives at Tradeweb. “A lot of different types of asset managers are using them.”
Tradeweb introduced the new functionality via a soft launch a few months ago, and has since taken the platform into full production with 11 liquidity providers.
Adam Gould, Tradeweb
Platform users can request quotes from all liquidity providers for comparison with the U.S. equities markets National Best Bid and Offer (NBBO).
The Tradeweb platform stores all trade-related data in perpetuity. Gould explained that clients can access a comprehensive history of any transaction made on the platform, including the ETF price on the exchange, the multiple liquidity providers that offered quotes, and where the ETF eventually traded.
Since its launch, the average trade size for US-listed ETFs on the platform has been 90,000 shares, according to Gould.
“We have trades that are smaller and ones that are substantially larger,” Gould told Markets Media. “It’s driven by how liquid the ETF is on the screen, how easy it is to hedge the underlying benchmark index and how much it trades in a given day.”
Although Tradeweb’s historical clients have been fixed-income money managers, only slightly over half of the platform’s transaction have been fixed-income ETFs while the rest of the trades have been in equities- and commodities-based ETFs.
Tradeweb plans to target the new functionality to a mix of European customers who want to trade US-listed ETFs, Tradeweb’s historic long-only asset managers, hedge funds, registered investment advisors, and ETF funds of funds.
Featured image via Comugnero Silvana/Dollar Photo Club