Tradeweb Adds Futures to European Equity Derivatives Platform
July 12, 2011 (London): Tradeweb Markets LLC, a leader in building and operating financial markets, today announced the addition of European equity futures to its multi-dealer-to-client equity derivatives platform. The new functionality streamlines the current phone-based, overthe- counter trading experience for block trades. By using the platform, institutional investors can put dealers into competition before the trades are submitted to the major derivatives exchanges for final pricing, clearing, and settlement.
This enhancement complements the existing equity options offering, allowing clients to negotiate futures trades on the universe of European-based equity indices, sector indices and single stocks on Tradeweb. The new functionality provides faster transaction times, better price discovery, and more efficient access to third-party technologies, such as order management systems and derivatives exchanges.
This is Tradeweb's first foray into delta one products, which are synthetic instruments that move in the same direction and at the same speed as the underlying, and are commonly used to achieve low-cost exposure to a stock or index.
"Equity futures are a valuable enhancement for many of our clients that trade synthetic equity," said Adriano Pace, Tradeweb's director of equity derivatives markets. "We plan to further expand the range of delta one products available on the platform."
On Tradeweb, clients put up to five dealers in competition through a request-for-quote (RFQ)trading protocol, achieving improved price discovery and best execution reporting, including a permanent audit trail for compliance purposes.
"A typical equity derivatives auction often takes more time than it does with other instruments, but clients like to have more certainty and structure to the process," Pace said. "That's why we designed an electronic marketplace that would provide a faster auction, in which clients receive responses from dealers within five minutes."
There are 12 dealers currently providing liquidity to the platform across all listed and "flex" futures on all eligible European exchanges, and clients can trade using outright or calendar spread strategies. The platform also supports delta working and delta exchange requests with the addition of risk pricing, live, executable prices that embed all market risk, planned for later this year.
Tradeweb launched its equity derivatives marketplace in 2010 in response to demand from market participants for an electronic solution that provides increased transparency and efficiency in equity derivatives trading.
A delta exchange order, or "market-neutral" order, allows the client and the dealer to exchange the hedging asset as well the future(s) in such a way that immediate market risk is eliminated. Also known as an "agency order," a delta working order is a directional order in which the client, having accepted a dealer's terms, needs to wait for the dealer to cover its market risk. The order is not complete until the dealer has bought/sold a sufficient number of units in the hedging asset.
About Tradeweb
Tradeweb is a leader in building and operating financial markets. As a pioneer in the development of electronic trading and trade processing, the company provides services in the fixed income and derivatives markets to clients in more than 50 countries. Since 1998, Tradeweb has operated a global fixed income and derivatives trading network that harnesses the distribution of the major investment banks with over 2,000 institutional clients. In 2008, Tradeweb introduced inter-dealing broking capability with the acquisition of voice broker Hilliard Farber and subsequently launched Dealerweb, an electronic IDB platform. Tradeweb Retail provides a trading and sales application to fixed income brokers and traders.
Notes to Editors
Flex futures are bilaterally negotiated derivatives between two counterparties that are able to be booked and cleared (settled) at the exchange, allowing clients to customize some of the terms of the future such as the expiry date, strike and settlement type.
A delta exchange order, or "market-neutral" order, allows the client and the dealer to exchange the hedging asset as well the future(s) in such a way that immediate market risk is eliminated. Also known as an "agency order," a delta working order is a directional order in which the client, having accepted a dealer's terms, needs to wait for the dealer to cover its market risk. The order is not complete until the dealer has bought/sold a sufficient number of units in the hedging asset.