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Interview with Enrico Bruni

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Enrico Bruni Headshot
Enrico Bruni
Managing Director, Head of Europe and Asia Business, Tradeweb

Interview with Enrico Bruni, Tradeweb
By Dietegen Müller, Frankfurt
Tuesday, 19 February 2019

“We are the transparency machine”

Bond trading platform braces itself for Brexit – sees growth in the ETF and repo markets

The trading platform Tradeweb is moving. As part of its Brexit preparations, the company is relocating its EU business from London to Amsterdam. According to the Head of Europe and Asia Business, a centre for electronic trading platforms and trading firms is being established there.

Enrico Bruni, Head of Europe and Asia at Tradeweb, tells Börsen-Zeitung that the electronic trading platform is preparing itself for challenging conditions due to Brexit. Until now, the European business had been managed out of London, but because of Brexit, Tradeweb is moving its EU headquarters to Amsterdam. The company received its trading licence from the Dutch financial regulator back in January. “We want to be accessible globally regardless of the outcome of Brexit,” says Bruni.

The deciding factor in choosing Amsterdam was the creation of a centre for electronic trading platforms and trading firms – CME, the Brokertec platform for repos, is just one of several others that have relocated there. In the event of a hard Brexit, the trading platform operator fears a risk of market fragmentation, which would complicate the supply of liquid assets. Costs for trading participants would also rise as a result of businesses having to relocate to the remaining EU countries. In the longer term, however, this could potentially be offset by an increase in efficiency.

Bruni is anticipating further electronification of European fixed income trading. “There is a lot of scope here,” says the managing director. The Markets in Financial Instruments Directive (MiFID II), which came into effect at the start of 2018, is contributing toward this. According to Marcus Schüler, who works as Head of Regulatory Affairs & Market Structure at Tradeweb, MiFID II has achieved its objective of more trading being processed electronically.

Tradeweb says that well over 30% of interest rate swaps in the EU are traded electronically, but the EU is still significantly lagging the U.S., which registers more than twice that figure. “The advance in electronic trading is not due solely to the trading obligation, but also to other MiFID II requirements such as reporting obligations and best execution provisions,” says Schüler. Bruni adds that trading platforms like Tradeweb address a serious concern among regulators: “We are the transparency machine.”

Tradeweb opened its European office in 2000 and initially offered electronic markets in fixed income trading. The venue now covers government and corporate bonds, covered bonds, credit default swaps, interest rate swaps and equity derivatives. The platform connects institutional clients with market makers via what is referred to as a ‘Request-for-Quote’ protocol, says Bruni.

The strategy for further expansion is based on organic growth and global partnerships. In addition, the company targets investment in specific areas such as Automated Intelligent Execution (AiEX). A trading desk defines the parameters under which it would like to execute transactions, and these orders are then automatically processed on the platform. “For government bonds and credit, this is a real efficiency tool and is used for smaller sizes. In the derivatives market, it can also be used to execute large trades,” says Bruni.

German investors are already “quite active” here, accounting for approximately 12% of trading turnover.

Germany likes ETFs

Moreover, Germany is contributing to the growth in the exchange-traded fund (ETF) space.

“The ETF business is the biggest growth driver,” says Bruni. He also sees potential in the repo market. This product area was relaunched in 2015 and is growing very well. This is mostly bilateral trading between broker-dealers and buy-side firms.

According to Tradeweb, the firm has at least 2,500 customers and offers trading in more than 40 products across 60 countries worldwide. Last year, it reported an average nominal daily trading volume of USD 540 billion. In January, the average nominal trading volume in European government bonds was almost USD 22 billion and USD 1.3 billion in European Credit per day on average.