Tradeweb Garners OTF Authorisation from FCA Ahead of MiFID II

The authorization will give clients greater flexibility in choosing venues and execution methods.

It is now just several weeks until the passage of MiFID II and firms are now in the final phase of preparing for the new regime on January 3, 2018. Ahead of the deadline, Tradeweb has become the latest venue to receive Organised Trading Facility (OTF) authorization from the UK’s Financial Conduct Authority (FCA).

Tradeweb’s approval by the FCA to operate as an OTF is a noteworthy move for the group, which can now give its clients greater flexibility to choose the type of venue and execution method that suits their needs. OTFs constitute any facility that aggregates buying and selling interests or orders related to financial instruments, focused on non-equities such as derivatives and cash bond markets.

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MiFID II in focus

The move follows that of other venues, which for much of 2017 have been gearing up for MiFID II via new compliance protocols, transaction reporting solutions, and other authorizations. Back in July, TP ICAP took similar steps to operate as an OTF by tasking Bloomberg Entity Exchange with a key role in helping centralize specific information segments.

Tradeweb’s new authorization will support the execution of intermediated and discretionary flow, while also enabling clients to discover new liquidity sources and trading opportunities. In line with the upcoming legislation, OTF operators will be required to collect information about venue users and transactions.

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It will also be important in augmenting Tradeweb’s MiFID II offering ahead of its implementation. The group has already operated as a an FCA-regulated MTF since 2007, servicing fixed income, derivatives, and exchange-traded-funds (ETF) markets.

MiFID II has called for more transparency and reporting measures from all manners of industry participants. In the case of OTF regulations, MiFID II pushes for more facilitation of information flows, specifically to venue users, with an emphasis on risk disclosures .

Enrico Bruni

In addition, Tradeweb APA has already garnered a series of commitments from sell-side firms constituting upwards of 70 percent of over-the-counter non-equity volumes. Enrico Bruni, Head of Europe and Asia at Tradeweb, commented on the approval: “MiFID II is a great example of regulatory reform paving the way for new business opportunities. Our OTF status will enable us to cater to the varying trade execution needs of our clients across the buy and sell-side.”

The latest FCA approval caps off an eventful year for Tradeweb, which has been actively recalibrating its business to better meet shifting regulatory demands. Apart from MiFID II, Tradeweb also selected Amsterdam back in July as its new EU base ahead of Brexit. As one of the largest electronic venues for OTC markets, the relocation of its EU base to Amsterdam would prevent any regulatory constraints with Tradeweb’s operations down the road.

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