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Tradeweb is supportive of the European Commission’s Communication today on “strengthening the safety of derivatives markets”. The Communication stresses the need for transparency and the management of systemic risk, and emphasises the need to clear OTC derivatives through regulated Central Counterparties (CCPs). Such regulation is intended to introduce appropriate controls, and allow corporate and institutional investors to continue to use derivatives effectively.
The Commission also acknowledges the importance of the comprehensive regulatory framework already announced by the US Treasury. It is significant that both Europe and the US strike the right balance between fixing systemic problems and encouraging the market innovation that broadens access to credit for governments, people and businesses.
Lee Olesky, CEO of Tradeweb commented, "The Commission is clear that OTC trading of derivatives will benefit from moving to regulated electronic platforms. These platforms are able to balance the market’s need for real OTC liquidity and innovation with the Regulator’s desire for transparency and risk reduction. Further, the call for multiple points of access into the CCPs means that regulated electronic platforms can compete to offer transparency, connectivity and risk reduction as they do today."
Electronic OTC derivatives markets are still at an early stage in their adoption, but have already seen vigorous growth in trading activity. Tradeweb launched its regulated electronic OTC derivatives markets in 2005. Since then:- Clients have executed more than 36,000 trades
- Over $4 trillion in contracts have been traded by clients
- 130 institutional clients are actively trading on the platform
- Dealers have been providing real-time pricing since the onset, offering clients significantly increased levels of market transparency
