The dramatic jump in European ETF issuance last year is well documented. The total invested rose by fully 40%, a remarkable figure given historic rates of growth (see chart below).
There has been a fall in settlement fails, an improvement in liquidity and we have seen opportunities for reduced bid/offer spreads. This aligns with a number of market factors from the loss of faith in active products, the increase focus on cost by investors, the new international structure - devised by Euroclear in partnership with the leading ETF issuer, Blackrock – and the entry of more asset managers into the ETF market.
Ultimately, all these variables have helped to boost investor confidence in the product.
The growth has also been good for the exchanges across Europe. As I pointed out in a speech at the World Exchange Congress in Oman recently, the ETF is rapidly becoming a pump-primer for stock market liquidity – bringing all-round benefits for Europe’s financial centres.