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NEWSLETTER | 24 Feb 2023

Consolidated tape initiative takes step forward

The famed ‘fragmentation’ of European markets, and its negative effect on ETF growth, might be about to change as news came this week that 14 European exchanges have got together to agree to work towards a consolidated tape. The move has been supported by EFAMA, which said this week: "We have identified important use-cases for institutional and retail investors alike, not least in the ability to receive best execution on trades. We also believe in the potential of the equities/ETF consolidated tape to attract more capital flows into mid-cap and small-cap stocks, as well as smaller markets generally."

The European appetite for ETFs seems only set to grow with this news and other news of ETF surveys and predictions this week seem to agree. EY joined others in predicting huge growth for ETFs in Europe in 2023, expecting the European ETF market to reach USD1.7 trillion by year end, and to report an annual 12 per cent increase in value over the next five years, reaching in excess of USD3.1 trillion AUM by 2030.

Our features this week sees Melissa Brown, Global Head of Applied Research at Qontigo, noting that ESG is particularly strong in European ETFs while Cerulli Associates reports strong appetite for ETFs in Europe, despite challenging markets.

All of this good news should not be dampened by the findings of the CFA Institute’s survey on inducements (commissions, to the rest of us) in financial surveys – the majority of European investment professionals believe banning them are unlikely to prevent mis-selling. Just a third (34 per cent) of investment professionals surveyed in the EU think that inducement payments should be banned, with respondents citing concerns that this could negatively impact on the variety of products offered to clients. This compares to almost half (48 per cent) of respondents in the UK, where inducements are already banned.

Finally, Gill Wadsworth talked to abrdn’s Robert Minter, director of ETF Investment Strategy, who noted that China is open for business after an extended Covid lockdown and with that comes a renewed appetite for commodities.

Minter reports production increases and price rises in aluminium and copper, with copper reaching a near seven-month high in January.

Beverly Chandler, Managing Editor

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Companies in this issue
abrdn
BNP Paribas
Cerulli Associates
EY
Global X
Qontigo
Morningstar
REX Shares

The European Fund and Asset Management Association (EFAMA) writes that it welcomes the recent proposal by European exchanges to build a consolidated tape.

Following an 11 per cent fall in assets under management (AUM) last year, growth in the ETF market is expected to rebound over 2023, reaching USD1.7 trillion by year end, according to EY’s latest European ETF research and analysis.

In common with the EFAMA announcement this morning, Cerulli Associates has found that ETFs have won out in a difficult year.

Fourth quarter 2022 insights from Qontigo, revealed that the ESG segment of the total global passive ETF market is just 4.7 per cent but accounted for more than 10 per cent of all net new assets across the industry in 2022.