A joint partnership between Normua Holdings and inter-dealer broker Tradition PLC formalized the launch of the ETF industry’s first electronic exchange platform. Based in London and designed for the European theatre, where ETF transparency is often problematic, “Navesis-ETF” is intended to provide “qualified customers” the ability to trade ETFs in real-time, and enable investors to create and redeem ETF units based on the fund’s net asset value (NAV). The initial launch of the platform will facilitate trade in upwards of 100 different Euro-centric ETF issues.
According to Rupert Hodges, managing director of TFS Derivatives, the brokering division of Compagnie Financiere Tradition that has partnered with Nomura, ” Up until now, institutional investors in ETFs on the primary market could only buy and sell units via market makers and other ‘authorised participants, accepting an indicative price determined by the supply and demand for the ETF offered. By offering the ability to trade based on NAV, Navesis-ETF is a game changer.”
Lee Burrows, Head of Delta One, EMEA for Nomura added, “Listing on a MTF will allow us to provide more liquidity and maximise efficiency in pricing.” Navesis-ETF has been in development for almost a year and according to the joint venture press release, the platform has been beta-tested for the past two months by clients that include Credit Suisse, HSBC and UBS. Burrows stated there will be a minimum order size for units of 25,000-100,000 ETF shares and will operate in two phases. From 0900-1200 GMT it will operate a continuous call phase, accepting bids and offers. Then, from 1200-1215 GMT, there will be a “dark option” phase similar to dark pool trading. It will also provide an auction process once a day.