Online trade venue and inter-dealer broker Tradeweb has launched an institutional marketplace for equity derivatives. The platform is the firm's third in the derivatives space, following its interest rate swaps and credit default swaps platforms, introduced in 2005.
Tradeweb will support electronic trade execution of equity options on all European single stocks, as well as the major indices. Clients will be able to place up to five dealers in real-time competition for listed, flex and OTC/bilaterally settled options, based on the request-for-quote functionality the company introduced in 1998 for US treasuries. The firm will also provide links with relevant clearing houses.
Nine equity derivatives dealers have already committed to support the new marketplace, including Bank of America Merrill Lynch, Barclays Capital, Citi, Deutsche Bank, Goldman Sachs, JP Morgan, Morgan Stanley, Societe Generale and Royal Bank of Scotland. The platform will also leverage Tradeweb's institutional network of more than 50 global dealers and 2,000+ buy-side customers.
“Volatility moves quickly in the European equity options markets and it is difficult to maintain tight bid/offer spreads over time,” said Bernard Gadelle, head of options trading at French co-operative bank Bred Banque Populaire. “The Tradeweb platform has successfully risen to this challenge, providing turnaround on price requests in less than three minutes and aggressive quoting from dealers.”
The move coincides with an effort by leading dealers to improve the efficiency of the equity derivatives market, following similar efforts for interest rate and credit default swaps over the past few years.
“Electronic trading of institutional sized equity derivatives is even more appropriate at a time when global regulation is set to demand greater transparency and efficiencies,” commented Lee Olesky, CEO of Tradeweb. “We're delighted with the initial response from buy-side institutions and look forward to rapidly connecting this growing trading community in an efficient global network.”