Ireland enjoys pole position in European ETF industry

Ciaran Fitzpatrick, State Street

State Street dominates the ETF industry in Ireland, and Ireland dominates the ETF industry across Europe. Ciarán Fitzpatrick (pictured), Managing Director & Head of ETF Servicing Ireland, State Street, explains that Ireland is the firm’s largest domicile for ETFs outside of the US, with over 500 ETFs serviced across 10 clients and USD450 billion in assets under administration in Ireland, representing 83 per cent of the Irish market.

State Street is joining etfLIVE Europe as a sponsor and Fitzpatrick is joining the regulatory panel at 9.00 on Thursday 21 May.

Fitzpatrick says that while the double taxation treaty between the US and Ireland has been an important part of the ETF industry’s growth there, it’s not the defining factor.

“The Irish market has a wide breadth of personnel with experience in servicing ETFs and a regulator who understands the product, which certainly helps,” Fitzpatrick says.

“In order to service ETFs, you need personnel, technology and experience and we have all three. Why choose somewhere else when all the components for a successful product are in Ireland.”

Looking back to the volatile markets experienced earlier this year, Fitzpatrick comments that they were the most volatile that have been seen since the financial crash in 2008, and that they were volatile for an extended period of time.

“We have invested heavily in technology to automate our processes for servicing the primary market so it was the first stress test,” he says. He reports that the firm saw a 170 per cent increase in creation and redemption over the last week March to the first week of April. “Our new architecture came through successfully as we were able to service clients as usual, even with people working from home. We came through with flying colours and the ETF product did too.”

Fitzpatrick believes that the experience of market volatility highlighted some of the key attributes of liquidity, transparency and lower cost, with the ETFs’ intraday pricing and liquidity proving a boon for asset managers and investors, with accurate price discovery throughout the day against over products where NAVs were outdated by the end of the day.

“State Street continues to perform as we would expect during these turbulent times,” he says. “We are still seeing new ETF launches even during the period and we are starting to see an increase in primary market flows picking up again. It’s not quite business as usual, but the market moves on very quickly and that is evident today.”

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