SIX pioneers RFQ trading for ETFs with the launch of QOD Europe

Rick Steves

“We believe this groundbreaking service will set a new standard in the European ETF landscape. ETF QOD Europe not only expands the variety of ETF products available but also addresses the need for a greater variety of execution mechanisms to satisfy best-execution in ETF trading. The service offers a high level of liquidity, execution quality, and pricing, making it a game-changer for both traders and asset managers.”

SIX Swiss Exchange, Switzerland’s premier financial exchange, has unveiled Quote-on-Demand Europe (QOD Europe). This innovative service marks the first time a European exchange operator has offered on-exchange Request for Quote (RFQ) trading for Exchange Traded Funds (ETFs), significantly expanding its ETF franchise.

Previously, the SIX Swiss Exchange listed over 1,700 tradable products. With the launch of ETF QOD Europe, clients now gain access to nearly 6,000 ETF products, including those listed on primary exchanges across Europe, such as the London Stock Exchange, Deutsche Boerse, Euronext, Nasdaq OMX, and Wiener Boerse.

ETF QOD Europe’s STP trading complements existing multilateral open order-book

ETF QOD Europe, a notable addition to SIX’s services, stands out for its efficient straight-through processing. This feature leverages the interoperable Central Counterparty (CCP) model, facilitating settlement into domestic Central Security Depositories (CSDs). The service complements the existing multilateral open order-book, offering an expansive range of tradable ETFs.

“High level of liquidity, execution quality, and pricing”

Christian Reuss, Head SIX Swiss Exchange: “SIX Swiss Exchange has been a trailblazer in the ETF industry for over 20 years. The launch of ETF QOD Europe reaffirms our commitment to innovation, providing a unique, cross-market trading experience for our users. We believe this groundbreaking service will set a new standard in the European ETF landscape. ETF QOD Europe not only expands the variety of ETF products available but also addresses the need for a greater variety of execution mechanisms to satisfy best-execution in ETF trading. The service offers a high level of liquidity, execution quality, and pricing, making it a game-changer for both traders and asset managers.”

Laura Bayley, Head SIX x-clear, commented: “By supporting the ETF QOD Europe service, we empower our members with seamless access to diverse markets and simplified clearing and settlement processes. The interoperable collaboration with our partner CCPs ensures a streamlined settlement process, eliminating counterparty risk and providing significant cost optimization benefits.”

Vikesh Patel, President, Cboe Clear Europe, added: “We are excited to be providing our clearing services to the ETF QOD Europe service being offered through SIX Swiss Exchange. This demonstrates our desire to improve Europe’s ETF market structure and deliver innovative services that allow participants to manage their risks of trading this asset class. It also signals our steadfast commitment to open access and clearing interoperability, which brings proven benefits in terms of innovation, post-trade efficiencies and greater participation through reduced costs.”

+95% trades executed at European Best Bid Offer (EBBO) or better

The RFQ trading method introduced by SIX allows traders to request quotes from multiple market participants, enabling them to select the best offer for executing large trades or trading assets not listed on open exchanges. This method has been proven to increase liquidity and offer better pricing.

According to SIX, over 95% of trades in QOD are executed at the European Best Bid Offer (EBBO) or better, leading to significantly improved liquidity and higher execution quality.

The collaboration of SIX with internal and external clearing and settlement partners ensures a reduction in counterparty risk and an increase in settlement efficiency. This collaborative effort includes SIX x-clear, Cboe Clear Europe, and LCH Ltd., all working closely to clear and instruct settlement for trades conducted on ETF QOD Europe.

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