Tradeweb: Best ETF Platform – For electronic platform Tradeweb, 2019 was a milestone year for European ETF trading. Adriano Pace, head of Equities (Europe) at the firm, says: “We saw total notional volume exceed EUR360 billion, up 43.5 per cent on the year before, while the number of institutional firms trading European ETFs on our platform grew by more than 10 per cent.”
Individual trades executed were up 191 per cent, as Tradeweb clients continued to benefit from strong pricing and efficient execution workflows. ”There was a significant uptake, by both new and existing customers, in the usage of our Automated Intelligent Execution (AiEX) tool, which allows traders to automate the request-for-quote (RFQ) process through a series of pre-programmed parameters.”
Last year, the proportion of European ETF trades processed via AiEX climbed to 65.4 per cent from 38.6 per cent in 2018. Pace notes that as clients have become more comfortable with how the tool works, they have increased their automated flow on Tradeweb. “AiEX enables trading desks to execute orders that require little human intervention in a cost- effective way that also helps them prove best execution,” Pace says.
The growing adoption of AiEX has been partly driven by faster responses to client enquiries from the dealers placed in competition. The average quote speed on the European ETF platform went from 5.9 seconds in January 2019 down to 1.4 seconds in December 2019. “This shows that liquidity providers have increased their own automation, rather than responding in a discretionary manner to each RFQ,” Pace says. “Also clients are leveraging our platform data to select the right trade counterparty for each enquiry, including dealers who are most likely to quote aggressively within a short time window.”
Pace explains that it is not just a speed game, but if the client is an active manager, then the quicker the RFQ process the better, particularly in times of heightened volatility or in conditions where information leakage may be a concern. “For example, during the last week of February 2020, it would have been difficult to manage the sheer quantity of ETF orders in a non-automated manner,” Pace stresses. That month, traded volume in European-listed ETFs surged to more than EUR42 billion on Tradeweb, with over 77 per cent of trades executed via AiEX.
The time release option with AiEX proved to be very popular among users in 2019. The feature allows clients to queue orders to be executed at a pre-set time. “The order is held by the platform and released to the RFQ process at a specific time of the day, which frees up time for the trading desk and guarantees that a competitive auction process occurs at that chosen moment,” Pace notes.
“The added flexibility over the timing of execution facilitates portfolio rebalancing and index replication, as well as transactions outside of local trading hours. It makes Tradeweb a 24-hour solution, as clients in Asia can pre-plan their trading during US hours, for instance.”
2019 was also the year when Tradeweb announced its collaboration with EuroCCP to introduce for the first time central counterparty clearing for European ETFs executed off-exchange. “This is an important piece of the infrastructure for European ETFs going forward,” Pace says. “We chose to partner with EuroCCP to give ETF market participants more flexibility in how they settle these trades, which is a positive step forward for the industry.”
Managing Director, Head of Equities, Tradeweb
Adriano Pace is a managing director at Tradeweb, head of Equities (Europe). Since joining the firm in 2010, Adriano has been instrumental in developing and running the equity derivatives and European ETF client-to-dealer platforms.
After starting his career with a three year spell on the equity futures and options desk at Union Bank of Switzerland, he moved to Credit Suisse First Boston where he became a director in the equity derivatives division. Then, as a director of the global equity derivatives desk at Deutsche Bank AG, Adriano was responsible for the sales coverage of UK institutional clients in all flow derivatives.