ETF traders navigate changing conditions
This report presents the findings from Risk.net’s fourth annual global exchange-traded fund (ETF) trading survey, commissioned by Jane Street. It includes responses from 285 institutional investors, as well as qualitative interviews from six buy-side firms.
A clear majority of respondents – 60% – use risk pricing most frequently to execute ETF trades, an execution style that allows traders to transfer market risk with immediacy. This trend continued in response to challenging conditions: through the initial Covid‑induced volatility, 49% said they relied more heavily on risk pricing than usual.
Respondents voiced the need for relationships with a variety of different counterparties when trying to source liquidity. A majority of respondents ranked independent market-makers and investment banks as the most consistent at providing over-the-counter (OTC) liquidity during this year’s volatility.
Respondents outside the US reported strong usage rates of UCITS ETFs with 65% already trading these products. Another 7% reported that while they don’t currently trade UCITS ETFs, they plan to begin trading them in the next 12 months.