Liquidity improving, trade sizes growing
This report presents the findings from Risk.net’s second annual global exchange-traded fund (ETF) trading survey, commissioned by Jane Street. It includes responses from 296 institutional investors, as well as qualitative interviews from 14 buy-side firms.
Nearly 90% of institutional traders think ETFs are more liquid or just as liquid as they were three years ago, across all asset classes, including emerging market ETFs, fixed-income ETFs and developed market ETFs. See more.
The Value of Competitive Pricing
Competitive pricing is the most important criterion for selecting counterparties, with 55% of institutions putting it in first place. See more.
Market-Makers Gaining Traction
Independent market-makers are the top choice of counterparty among buy-side institutions. See more.
Among the key global findings of the 2018 survey:
Nearly 90% of institutions believe that ETFs are more liquid or about the same vs. 3 years ago - across all asset classes including emerging markets ETFs, fixed income ETFs, and developed markets ETFs.
31% of institutions said they look to underlying securities to evaluate the liquidity of an ETF, up from 27% in 2017. US/Americas and Europe-based firms propelled this group, with 37% and 33% respectively saying they focus on implied liquidity.
How Institutions Are Trading ETFs:
38% of institutions execute more than 25 ETF trades a month; 30% report executing more than 50 ETF trades a month.
24% of institutions executed trades over $100 million in the last year. 38% reported trades over $50 million.
47% of respondents said they are most commonly using risk pricing to execute block orders for ETFs.
Who Institutions Choose to Trade With:
55% of institutions place the most emphasis on competitive pricing when selecting a liquidity provider. Pricing is valued twice as much as any other criteria.
35% of respondents indicated they most commonly trade with market-makers - the top choice of trading counterparty among institutions globally.