Tradeweb Announces EFP on Cboe High Yield Corporate Bond Index Futures
NEW YORK – July 29, 2020 – Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today announced it has made available for trading an exchange-for-physical (EFP) based on the Cboe® iBoxx® iShares® $ High Yield Corporate Bond Index Futures (IBHY) listed on the Cboe Futures Exchange (CFE). This new offering is available through the Dealerweb EFP platform.
An EFP is a trade in which a buyer transfers a long ETF position and a short futures position to a seller in return for a short ETF position and a long futures position. Dealers and market makers typically trade EFPs in order to better manage balance sheet, reduce financing costs and minimize basis risk.
The standardized nature of EFP trading makes the market a strong candidate for increased automation and the Dealerweb EFP platform is a primary destination for EFP trading. Significant volume is already traded on the venue in a number of EFPs. These include the VXX EFP, which uses Cboe Volatility Index® (VIX® Index) futures, and was launched in early 2019.
Adam Gould, Head of U.S. Equities at Tradeweb said: “It is a critically important time for the high yield bond market, and so it is paramount that investors and traders can efficiently manage their market exposure and reduce risk. Trading EFPs through Dealerweb helps to centralize otherwise fragmented liquidity, increasing price transparency for all market participants. Given our broader business in high yield cash credit trading, and ETF trading, we see the introduction of the IBHY EFP as an important next step in ensuring the maturity and flexibility of the high yield bond market.”
Arianne Criqui, Head of Derivatives and Global Client Services at Cboe Global Markets, said: “We are pleased that Tradeweb recognizes the utility of the suite of iBoxx indices, which leverage the deep and liquid iShares® ETF ecosystem. Trading volume in Cboe IBHY futures has grown as market participants increasingly sought new ways to manage exposure to the evolving corporate bond market. This latest development continues to expand the ecosystem and we look forward to further broadening access to the corporate bond market through the new EFP on Dealerweb.”
Trading in high yield cash credit has doubled in two years at Tradeweb, with 4% of TRACE traded on the platform on average each day. Tradeweb also caters to bond ETF traders and investors: in the first half of the year, the Tradeweb ETF platform handled over $150bn of volume in fixed income ETF trading.
This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, our outlook and future performance, the industry and markets in which we operate, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions and future events are forward-looking statements.
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Futures trading is not suitable for all investors and involves the risk of loss. That risk of loss can be substantial and can exceed the amount of money deposited for a futures position. You should, therefore, carefully consider whether futures trading is suitable for you in light of your circumstances and financial resources. You should put at risk only funds that you can afford to lose without affecting your lifestyle. For additional information regarding futures trading risks, see the Risk Disclosure Statement in Appendix A to CFTC Regulation1.55(c).
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The iBoxx® iShares® $ High Yield Corporate Bond Index and the iBoxx® iShares® $ Investment Grade Corporate Bond Index (the “Indexes”) referenced herein are the property of Markit Indices Limited (“Index Sponsor”) and have been licensed for use in connection with Cboe® iBoxx® iShares® $ High Yield Corporate Bond Index Futures and Cboe® iBoxx® iShares® $ Investment Grade Corporate Bond Index Futures. Each party to a Cboe® iBoxx® iShares® $ High Yield Corporate Bond Index Futures or Cboe® iBoxx® iShares® $ Investment Grade Corporate Bond Index Futures transaction acknowledges and agrees that the transaction is not sponsored, endorsed or promoted by the Index Sponsor. The Index Sponsor makes no representation whatsoever, whether express or implied, and hereby expressly disclaims all warranties (including, without limitation, those of merchantability or fitness for a particular purpose or use), with respect to the Indexes or any data included therein or relating thereto, and in particular disclaims any warranty either as to the quality, accuracy and/or completeness of the Indexes or any data included therein, the results obtained from the use of the Indexes and/or the composition of the Indexes at any particular time on any particular date or otherwise and/or the creditworthiness of any entity, or the likelihood of the occurrence of a credit event or similar event (however defined) with respect to an obligation, in the Indexes at any particular time on any particular date or otherwise. The Index Sponsor shall not be liable (whether in negligence or otherwise) to the parties or any other person for any error in the Indexes, and the Index Sponsor is under no obligation to advise the parties or any person of any error therein.
The Index Sponsor makes no representation whatsoever, whether express or implied, as to the advisability of purchasing or selling Cboe® iBoxx® iShares® $ High Yield Corporate Bond Index Futures and Cboe® iBoxx® iShares® $ Investment Grade Corporate Bond Index Futures, the ability of the Indexes to track relevant markets’ performances, or otherwise relating to the Indexes or any transaction or product with respect thereto, or of assuming any risks in connection therewith. The Index Sponsor has no obligation to take the needs of any party into consideration in determining, composing or calculating the Indexes. No party purchasing or selling Cboe® iBoxx® iShares® $ High Yield Corporate Bond Index Futures or Cboe® iBoxx® iShares® $ Investment Grade Corporate Bond Index Futures, nor the Index Sponsor, shall have any liability to any party for any act or failure to act by the Index Sponsor in connection with the determination, adjustment, calculation or maintenance of the Indexes. iBoxx® is a service mark of IHS Markit Limited.
The iBoxx® iShares® $ High Yield Corporate Bond Index and the iBoxx® iShares® $ Investment Grade Corporate Bond Index (the “Indexes”) and futures contracts on the Indexes (“Contracts”) are not sponsored by, or sold by BlackRock, Inc. or any of its affiliates (collectively, “ BlackRock”). BlackRock makes no representation or warranty, express or implied to any person regarding the advisability of investing in securities, generally, or in the Contracts in particular. Nor does BlackRock make any representation or warranty as to the ability of the Index to track the performance of the fixed income securities market, generally, or the performance of HYG, LQD or any subset of fixed income securities.
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About Tradeweb Markets
Tradeweb Markets Inc. (Nasdaq: TW) is a leading, global operator of electronic marketplaces for rates, credit, equities and money markets. Founded in 1996, Tradeweb provides access to markets, data and analytics, electronic trading, straight-through-processing and reporting for more than 40 products to clients in the institutional, wholesale and retail markets. Advanced technologies developed by Tradeweb enhance price discovery, order execution and trade workflows while allowing for greater scale and helping to reduce risks in client trading operations. Tradeweb serves approximately 2,500 clients in more than 65 countries. On average, Tradeweb facilitated more than $790 billion in notional value traded per day over the past four fiscal quarters. For more information, please go to www.tradeweb.com.
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