This paper examines the dynamics of derivatives trading in the EU. It analyzes transactions executed on and off trading venues (TVs), such as multilateral trading facilities and organized trading facilities. The analysis considers why some transactions outside the scope of the derivatives trading obligation are executed on TVs.
The paper also explores the composition of transactions executed by systematic internalizers (SIs) and describes the role SIs play in the market, both as liquidity providers to clients and on TVs, where they are commonly referred to as market makers or dealers.
The analysis is based on European data collected by ISDA from 30 European approved publication arrangements (APAs) and TVs in the fourth quarter of 2021. EU interest rate derivatives (IRD) trading activity is measured by IRD traded notional reported by APAs and TVs located in the EU. Of the 30 APAs and TVs included in the ISDA database, 13 are located in the EU.
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