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Stephen Cohen, BlackRock

Post MiFID II ETF data shows record European trading volumes and liquidity

With the first anniversary of the introduction of MiFID II looming large, newly mandated trade reporting has unveiled record trading volumes and liquidity in the European ETF industry which, according to BlackRock’s Head of iShares EMEA, Stephen Cohen, provides comfort to new and existing investors that European ETFs are an efficient and liquid way to invest.

More trading data – showing how often ETFs are changing hands – reveals that investors are using them to navigate heightened volatility and uncertainty, Cohen (pictured) says.

“As the market matures, so do the different ways investors use the products, and the ability to trade larger exposures is an important part of that optionality – trading volumes help prove that the ETF market is deep enough to transact effectively both on small and large scales. 

“The combined visible ETF trading on and off exchanges – reporting on the latter being mandated by MiFID II – has quadrupled between 2017 and 2018.

“In 2017 visible liquidity was limited to the ~USD500 billion we could see trading on European exchanges. In 2018 we can see that European ETF market will trade >USD2 trillion across exchange and off-exchange platforms.

“Even without additional visibility, average on-exchange ETF trading volumes increased 29 per cent for iShares EMEA between 2017 and 2018.”

Cohen writes that iShares products were the most actively trading exchange cash equity instrument in Europe on two occasions in 2018: the iShares Eurostoxx UCITS ETF traded >USD500 million on 29 and 30 August (2x more than any European equity); iShares Physical Gold ETC traded ~USD409 million (USD150 million greater than No2 active stock) on 2 July. 

Cohen writes: “For the iShares European range, there are 25 per cent more registered market makers - an essential part of the ETF ecosystem – since MiFID II came into force, in part due to new obligations MIFID II imposed on liquidity providers to register with exchanges as market makers. The more market makers in a trading ecosystem the easier it is for ETF investors to transact, or, in other words, the more liquid the ETF market.

“An additional layer of cost efficiency – the spreads on the iShares European range have fallen 14 per cent in the last year and 24 per cent in the last two years, as greater trading activity and more market markers – an essential part of the ETF ecosystem – sought the economic benefit of providing avenues for ETF trading and therefore tighter pricing to the benefit of investors.”

Looking forward to 2019, Cohen writes that greater visibility is a significant step but this still needs to be aggregated and is currently not readily packaged for all portfolio managers. The next big step forward will be a ‘consolidated tape’ that aggregates and reports the volumes of ETFs traded into one place.


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