MarketAxess, BlackRock partner to enhance efficiency of fixed income ETF market making

Jun 3rd, 2014 | By | Category: Fixed Income

MarketAxess, an electronic fixed income trading platform operator, and BlackRock, the parent of iShares, have teamed up to provide iShares fixed income ETF information and electronic basket trading technology for ETF market makers.

MarketAxess, BlackRock partner to enhance efficiency of fixed income ETF market making

MarketAxess and BlackRock have partnered to enhance the efficiency of market making in iShares’ fixed income ETFs. (Generic screenshot from MarketAxess platform)

The consolidated iShares content on the MarketAxess trading system enables ETF market makers to efficiently trade baskets of iShares ETF constituent bonds using MarketAxess’ patented list trading functionality.

Bid-and-offer wanted lists can also be sent via open trading protocol, to access the broadest all-to-all liquidity pool of over 1,000 institutional investor and broker-dealer firms.

“Traditional institutional investors are increasingly adopting ETFs for a variety of portfolio management strategies. Traders now have an efficient way to manage their iShares holdings. By streamlining the creation of bid/offer wanted lists of ETF constituent bonds within MarketAxess, traders can efficiently source pricing from multiple counterparties. ETF market makers can also view ETF trading activity for greater insight into actively traded bonds, thereby improving pre-trade price information,” says Richard Schiffman, Open Trading Product Manager at MarketAxess.

“We’re pleased to announce this partnership with MarketAxess so that authorized participants and ETF market makers can efficiently trade baskets of iShares ETF constituent bonds. This will ultimately help institutional investors add fixed income ETFs to their investment portfolios,” commented Patrick Dunne, Head of iShares Global Markets & Investments at BlackRock.

iShares ETF page features:

  • View end of day iShares ETF fund holdings and related information across corporate bond ETFs and other fixed income funds, such as Treasuries, municipal, mortgages, etc.
  • Electronically trade bonds on MarketAxess from iShares’ investment grade, high yield and select emerging market ETFs.
  • Send inquiries via Market Lists to MarketAxess’ all-to-all liquidity pool, maximizing trade opportunities.
  • List trading for constituent bonds with flexibility to trade all or part of the basket, improving efficiency for the create/redeem process.
  • Trade sizes for each constituent dynamically change when the basket unit count is adjusted.

BlackRock and MarketAxess have executed a Letter of Intent and commencement of operations is subject to finalization of a definitive agreement, which the parties expect to complete within the next several weeks.

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