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  • Tradeweb Statement on MiFID II/MiFIR Proposals


    Tradeweb supports the European Commission's objectives reflected in MiFID II/MiFIR of promoting transparency, fostering competition among trading venues, improving market efficiency and moving the execution of standardised derivatives onto multilateral regulated venues.

    We are concerned, however, that:

    1. the proposals do not sufficiently reflect the G20 commitment relating to the execution of standardised derivatives on electronic trading platforms; and

    2. the requirements regarding public distribution of pre-trade data, as proposed, could adversely impact liquidity in the fixed income and derivatives markets.

    Electronic Trading of Derivatives 

    Tradeweb supports the MiFIR proposal to require the trading of designated derivatives on multilateral regulated venues (exchanges, MTFs or OTFs). Furthermore, while we believe it is important that market participants retain sufficient flexibility in how they trade derivatives to reflect the varying levels of liquidity available for different instruments, we believe that the proposals could go further to reflect the G20 commitment to move the trading of standardised derivatives onto exchanges or electronic trading platforms, where appropriate. To that end, as a general guideline, we believe that the vast majority of derivatives that are currently cleared are suitable for electronic trading.

    Pre-Trade Transparency 

    Since 1998, Tradeweb has brought greater transparency to the fixed income markets and has offered trading of derivatives globally since 2005. Based on this experience, we are concerned that the MiFIR proposal to require publication on a continuous basis of pre-trade prices and depth of related trading interests may result in liquidity providers choosing not to make markets in certain instruments or widening their bid-offer spreads so as to price in the risk associated with such information being broadcast to the entire market.

    Moreover, this reduced liquidity in the secondary markets could lead to increased costs of funding for governments and corporate issuers in the primary markets. Whereas the proposed pre-trade transparency requirements may be beneficial in the equities markets with their high levels of liquidity and retail investor participation, such obligations in the less liquid and overwhelmingly institutional fixed income/derivatives markets would be counterproductive.

    Tradeweb supports the Commission's proposals that pre-trade transparency requirements be identical across exchanges, MTFs and OTFs.

    Post-Trade Transparency 

    Tradeweb agrees that appropriate levels of post-trade transparency could benefit participants. However, we would urge that any requirements be implemented on a gradual basis (e.g., starting with smaller trade sizes in more liquid instruments) or that there is an appropriate delay built into the proposals so that the rules do not adversely impact liquidity available to buy-side institutions.

    Equal Access to CCPs 

    Tradeweb strongly supports the Commission's efforts to ensure that central counterparties be required to provide non-discriminatory access to trading venues. We have already established automated links, both directly and indirectly through middleware vendors, to major CCPs to facilitate the clearing services chosen by our clients and intend to connect to other CCPs in the future, where appropriate. Equal access to these CCPs is critical to ensure competition among trading venues. Such competition, in turn, is necessary to foster choice of execution methods and price efficiencies for buy-side market participants.

    Scope of Covered Derivatives 

    Tradeweb also strongly supports the Commission's efforts to ensure that the clearing mandate for derivatives includes transactions regardless of the trading venue where they are executed. Discriminating based on the venue of execution (i.e., requiring clearing if an instrument is traded on an MTF/OTF but not if the same instrument is traded on an exchange) threatens to undermine the regulators' goal of reducing systemic risk by promoting central clearing and could damage competition by unfairly favouring exchanges over other regulated venues. However, the final date by which the relevant MIFIR provisions must be applied should be moved forward to be consistent with that of the clearing mandate for "OTC" derivatives under EMIR (the European Market Infrastructure Regulation).


    Tradeweb has played a major role in creating a more efficient marketplace in Europe for the trading of fixed income and derivatives. For the region to remain globally competitive, it is essential that rules are implemented that encourage the adequate supply of liquidity to institutional investors, while providing the safeguards that increased price transparency provides. These goals can best be achieved through electronic markets, which reduce a variety of operational, trading, settlement and clearing risks.

    We look forward to working with the European regulators on the MiFID II/MiFIR proposals, including to reflect better the G20 commitment regarding electronic trading of derivatives and to ensure that pre-trade transparency obligations do not adversely impact liquidity in the fixed income and derivatives markets.

    Download: PDF(PDF, 46.50 K) 

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