Institutional ETF
Trading Survey

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.

ETF Survey Report

Key Findings

Improving Liquidity

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:

Improving Liquidity

Institutional Perception

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.

Evaluating Liquidity

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:

Frequency

38% of institutions execute more than 25 ETF trades a month; 30% report executing more than 50 ETF trades a month.

Size

24% of institutions executed trades over $100 million in the last year. 38% reported trades over $50 million.

Execution Method

47% of respondents said they are most commonly using risk pricing to execute block orders for ETFs.

Who Institutions Choose to Trade With:

Competitive Pricing

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.

Market Makers

35% of respondents indicated they most commonly trade with market-makers - the top choice of trading counterparty among institutions globally.