European Exchanges Benefit From ETF Growth

Shanny Basar

Listings of exchange-traded products grew 82% at the London Stock Exchange while Germany’s Deutsche Börse had its second strongest year in ETF trading volume in 2015.

The London Stock Exchange Group said in a statement today that it had 221 new exchange-traded product listings last year, 82% more than in 2014, so that it listed 861 ETFs at the end of last year. Total on-exchange value traded for ETF/ETPs in London rose 42% from 2014 to £234.9bn ($345bn) through 3.1 million trades last year, although the majority of ETF trading in Europe is off-exchange.

Last month the London Stock Exchange Group expanded its ETF products through the acquisition of XTF, a US provider of data, analytics and ratings. XTF’s data and research tools cover over 6,000 indexes across asset class, sector and industry in more than 30 countries and track the performance and flow of funds globally related to the underlying constituents of all US-listed ETFs. The exchange said XTF will be integrated into the group’s Information Services Division, which includes index provider FTSE Russell.

Mark Makepeace, group director of Information Services and chief executive of FTSE Russell, said in a statement: “The rapid rise of the global ETF market is prompting demand from institutional and retail investors and their intermediaries for access to high quality global analytic tools and XTF offers a complementary product suite to sit alongside the Group’s global benchmarks and ETF listing venues.”

Deutsche Börse said in a statement today that ETF trading volume on its Xetra platform was €188.9bn ($204bn) in 2015, the second strongest year since its launch in 2000. The German exchange said it now has more than 1,100 tradable ETFs.

The growth of ETFs is shown in a report from BlackRock which said that ETFs had record global inflows of $347bn last year. In addition iShares, the US fund manager’s ETF business, had record inflows of $130bn.

Mark Wiedman, global head of iShares, said in a statement that institutional investors accelerated the use of ETFs as substitutes for futures and swaps in 2015.

“As banks’ balance sheet costs have ratcheted up, so too has the cost of using futures and swaps. ETFs are now typically a more efficient substitute for major global equity indices and for bond indices like credit derivatives,” added Wiedman. “For instance, S&P 500 futures averaged 56 basis points over the last year, while our iShares Core S&P 500 ETFs in the US and Europe only cost seven basis points.”

Data provider ETFGI said global ETFs/ETPs had record net new assets of $319.3bn in the first eleven months of last year as net inflows were 15% higher than during the same period in 2014.

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