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Tradeweb reports growing demand for RFQ execution

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Tradeweb, the electronic trading platform, reports that 2017 saw record inflows into ETFs of over USD400 billion through November, reflecting the institutional investor’s love affair with ETFs.

The firm writes that as they ramp up their investment in the asset class, institutions are also changing their approach to ETF trading, increasing their use of over–the-counter platforms that support RFQ execution.

“Using RFQ, investors gain better pricing by putting liquidity providers in competition in real-time, while also improving workflow efficiency. This type of trading also provides investors with immediacy in execution, and the ability to buy or sell an ETF as soon as liquidity providers submit their pricing.

“Tradeweb has been central to changing the way investors transact ETFs since launching its platform for RFQ ETF trading in Europe in October 2012 and in the US in 2016. Clients on the platform have access to enhanced pre-trade transparency, efficient execution and electronic audit trails for compliance and best execution through an automated and compliant workflow. As of November 30, 2017, more than EUR484 billion in European-listed ETFs and over USD74 billion in US-listed ETFs have traded on its platforms.”

The firm writes that activity on the global Tradeweb institutional ETF platform topped 118 per cent in compound annual growth, exceeding USD900 million in average daily trading volume each of the last four quarters.

According to ETFGI, fixed income ETFs saw net inflows of approximately USD130 billion through the end of October 2017. This brings the total invested in fixed income ETF assets to USD800 billion globally. On Tradeweb, approximately 30 per cent-40 per cent of trading activity takes place in fixed income ETFs, while the overall market for the asset class falls between 15 per cent-20 per cent.

The firm writes: “As investment in ETFs continues to grow and become more attractive to institutional investors, RFQ trading has helped support the adoption of these products with better access to liquidity, more competitive and transparent pricing, and an optimised workflow.”

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