SIX Swiss Exchange has identified its Quote on Demand (QOD) service as a key driver behind the rising ETF and ETP trading activity. With over 10,000 trades recorded in each of the last three months, QOD volumes have exceeded CHF 600 million for the first time in April, over 32% more than in March. An on-exchange RFQ offering launched back in 2021, QOD increases trading efficiency and helps reduce transaction costs.

Overall, Exchange Traded Fund (ETF) transaction volumes at SIX Swiss Exchange continued on an upward trajectory last month, reaching over 200,000 transactions in April, while ETF trading turnover of CHF 5.9 bn in April corresponds to an increase of 7.7% on the previous month. With CHF 21,8 bn traded in the first four months, the YTD increase amounts to 13.6%.

The rising figures coincide with key price improvements achieved via QOD in ETFs and Exchange Traded Product (ETPs). In Q1, SIX Swiss Exchange has delivered average price improvements between 4.5 and 5 basis points (bps) compared to the European Best Bid and Offer (EBBO). This translates to a significant 22% saving in bid/offer spread costs, and a noticeable proportion of executions occur at the pivotal halfway mark between the price at which buyers are willing to purchase an ETF or ETP, and the price at which sellers are willing to sell.

Overall trading turnover on the Swiss stock exchange, which includes equites and Fixed income as well as ETFs, totalled CHF 91.7bn, 18.3% more than in April 2023. YTD turnover amounts to CHF 436.6 bn, an increase of 15.5%. Around 4.3 million transactions were carried out last month, which corresponds to an increase of 23.6% compared to April 2023.

“Rising ETF activity shows that more liquidity is available on-exchange than simply looking at the historic average daily value traded,” said André Buck, Global Head Sales & Relationship Management at SIX Swiss Exchange. “Achieving price improvements indicates better execution quality, meaning trades are executed closer to the prevailing market price or at more favorable prices than initially anticipated. This reflects efficient order handling and minimizes the risk of adverse price movements during execution, which is particularly crucial for institutional investors executing large orders.”

SIX Swiss Exchange has also released a Q1 ETF activity report underscoring the evolving nature of liquidity providers in the market. The findings reveal that 35% of liquidity in 2024 originates from non-prop sources, marking a significant 40% increase since 2018. This increase signals a “broader participation of natural buyers and sellers, contributing to the depth and resilience of on-exchange liquidity pools,” Buck added.

Source: SIX