UBS Investment Bank today announced UBS MTF, the first broker operated multilateral trading facility (MTF) to feature a central clearing model, is officially launched and accepting member orders.
UBS MTF operates separately as an external venue that pools non-displayed liquidity and matches orders on a non-discretionary basis. UBS MTF is open to external members. The UBS MTF clearing model benefits members by mitigating counterparty risk and helping to reduce settlement costs.
The UK Financial Services Authority (FSA) granted permission in August 2010, the Swiss Financial Market Supervisory Authority (FINMA) confirmed authorisation to admit Swiss participants in September 2010, and the HM Revenue & Customs (HMRC) Statutory Instrument providing Stamp Duty Reserve Tax Intermediary Reliefs became effective October 2010.
UBS MTF is a non-displayed orderbook for crossing orders in European securities. UBS MTF offers mid-point matching based on the price of the primary market. As a 100% dark liquidity pool, UBS MTF has no pre-trade signalling risk or display of any kind. Executions completed in UBS MTF are reported anonymously post-trade in real time to Markit BOAT.
UBS MTF sends executed trades to SIX x-clear Ltd, the Central Counterparty (CCP) and licensed Swiss bank. Members benefit with anonymity, netting, collateral management, margining and settlement for all securities traded on UBS MTF. UBS MTF plans to offer a 'user choice' model that will add EuroCCP as an additional CCP, once industry regulators allow more interoperability. Interoperability enables a member firm to realise scale benefits on all of the flow it can consolidate from multiple trading platforms into the interoperating CCP of its choice that has best affinity with that member's commercial and functional profile.
Dr. Robert Barnes, CEO of UBS MTF, said: "UBS MTF is open for business as a venue available to participants seeking to limit the potential for market impact. We've created this facility to deliver the best practices of efficiency, fair access and client choice in the equities markets."
UBS, as a broker dealer, will continue to operate its internal crossing process called UBS Price Improvement Network (UBS PIN) that is discretionary and selective to ensure suitable and natural liquidity for UBS clients. UBS uses discretionary logic to cross orders within UBS PIN and/or send orders to external venues, including UBS MTF, for best execution.
Tim Wildenberg, Head of Direct Execution, EMEA said: "The new UBS MTF is an important step forward in widening the types of liquidity available to clients, which translates to improved crossing opportunities and support for non-discretionary orders. Our electronic trading clients will certainly benefit from UBS MTF and we are excited to use this new trading platform."