A new multilateral trading facility (MTF) has been launched by Nomura and global interdealer broker Tradition, affording electronic trading of exchange traded funds (ETFs), referencing net asset value (NAV).
The London-based joint venture, called Navesis-ETF, lets institutional traders, sell-side banks and market makers trade intraday and at auction using NAV prices in the ETF primary market, with cross asset class coverage.
“The ETF industry has enjoyed a rapid ascent over the past 10 years but structural inefficiencies have meant that the market has not reached its true potential,” said Lee Burrows, head of Delta One, EMEA at Nomura. “As leaders in liquidity management, and as a large player in the ETF market, we know from first-hand experience that Navesis-ETF fulfills the desires of participants and regulators.”
Nomura, which is an ETF market maker, said the MTF was designed using existing Tradition proprietary technology to increase transparency and efficiency, boost market liquidity and reduce costs. The bank was hoping to change the current creation and redemption process, letting market participants trade NAV-based ETF orders in real-time.
“Navesis-ETF represents an important step-change in the future of ETF trading. It has been developed in conjunction with Nomura to specifically tackle market inefficiencies and we believe it will help to grow liquidity, increase transparency, and be seen as a positive industry initiative ahead of regulatory reform on both sides of the Atlantic,” said Rupert Hodges, managing director – TFS Derivatives, at Tradition.