While low volatility will leave equity trading volumes stagnant for the rest of the year, European ETF trading is set to keep on growing, according to research from Bloomberg Intelligence analyst Nicholas Phillips.
ETF trading volume is continuing to grow in Europe, according to Bloomberg Intelligence, tripling between 2018 and 2024. Year-on-year, ETF trading in H1 2024 rose by 19% to €1.4 trillion. This trajectory is expected to continue for the rest of the year, the firm stated, predicting that ETFs could capture between 12 and 15% of European trading by year-end.
This strong performance has a number of potential contributing factors, Phillips suggests. Volatility spikes over the past five years, the result of crises including Covid-19 and the war in Ukraine, bolstered European ETF value traded. This hit a peak in H1 2022, with a recorded €1.6 trillion.
Although price swings have tailed off, ETF volume traded growth has not. “This suggests ETFs are finding natural growth, in contrast to equities, which have remained flat amid subdued volatility,” Phillips notes.
In terms of where ETF trades are being executed, lit order book volume has stayed fairly static since 2019, the report says. The focus instead is on request-for-quote (RFQ) platforms, which were used for 46% of European ETF trading in H1 2024 – up from just 18% in H1 2019.
The majority of RFQ trading goes through Bloomberg and Tradeweb, the research states, with Xetra the most active exchange for ETFs on a lit order book. For bilateral trades, LSE and Cboe were the favoured venues in H1.
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