Ireland continues to dominate the European ETF industry
Having trained with Dillon Eustace, Brian Higgins (pictured), partner, returned some 14 years ago and is now in the happy position of being with Ireland’s largest law firm in the funds industry, and working with Dublin-registered ETFs. Higgins is joining the regulatory panel for etfLIVE Europe, discussing the rapid rise of the ETF industry and the potential impact of MiFID II changes and the potential for active ETFs in Europe.
Ireland is the leading ETF domicile in Europe accounting for approximately 60 per cent of European ETFs. The appeal initially partly came from the double taxation treaty between the US and Ireland which allowed ETFs using US securities to avail themselves of a tax break. “It was one of the factors at the start,” Higgins says. “But now the industry has grown to such a scale that Ireland is seen as an ETF centre, because of all the infrastructure here in terms of service providers and advisers (such as lawyers and accountants).”
The early part of 2020 has seen strange times for everyone, Higgins says. He acknowledges that we will continue to be in uncertain times for a while yet and is inherently cautious. However, he is happy to see that ETFs have weathered the storm so far. “The regulatory fears around a stressed market have not been realised in the manner that some feared it may have,” he says.
He observes that while the European ETF market is famously smaller than its US cousin, and fragmented across its various exchanges, it is 20 years old this year, with a strong regulatory framework, so it is a mature market now.
He also sees that plain vanilla ETF launches are largely being overlooked in favour of factors and themes.