The European exchange-traded products (ETPs) market reached record figures in 2015, according to data from the main ETP markets. Börse Stuttgart's ETP turnover stood at €12.4bn at the end of 2015, up by more than 40% year on year. "One of the main factors driving turnover at Börse Stuttgart in 2015 was extremely intense trading in equity ETFs," said Michael Görgens (pictured), head of ETF and bond trading at Börse Stuttgart. "Investors increasingly used these products for tactical allocation in a dynamic market environment."
Börse Stuttgart's figures also show that 2014 and 2015 short and leverage trading bolstered the exchange's turnover. "In response to index highs and substantial market corrections, there was also intensive trading in short ETFs based on the DAX as a form of short-term hedge," said Görgens. "Altogether, out of the total volume of ETFs traded at Börse Stuttgart in 2015, around €1bn was generated by short products and their leveraged variants."
According to the latest research by BlackRock on the sector, 2015 highlighted the long term growth trajectory for global ETPs, as well as an increasing diversification by geographic exposure and the ability to adapt quickly to shifting market sentiment. "The focus of ETF investors shifted from emerging markets towards industrialised countries, notably the US and Europe, in anticipation of a change in the interest rate policy of the US Federal Reserve," said Görgens. "Demand was particularly strong for products based on the German DAX blue-chip index [which] made up a large proportion of ETF trading at Börse Stuttgart."
European flows totaled US$82.2bn, setting a new record overall, for both equity ($50.6bn) and fixed income (S$30.3bn), according to the BlackRock report. In the meantime, figures from the SIX Swiss Exchange show an increasing turnover and number of trades, including a 20% increase in the turnover (CHF8bn), which set up a new record. According to SIX, ETF turnover has doubled since the end of 2008, while the number of trades stood at 269,000 compared to 221,000 in 2014.
In the Nordics, however, securitized derivatives drove much of the activity in the NGM exchange showing a 91% increase year on year (€8.8bn in 2014 to €16.8bn in 2015). "Increased interest among investors has resulted in significant market growth," said Magnus Cadario, head of structured products at Boerse Stuttgart's subsidiary Nordic Growth Market (NGM). "At the same time the competition in the market has also increased."
The most active country in the region is Sweden, where about 80% of the ETPs were traded in 2015. Finland and Denmark represented respectively 8% and 7% of the trading. As to instrument types of securiticised derivatives, bull & bear certificates represent nearly 62% of the trading activity, while mini futures were behind 19% of the exchange's turnover. The most preferred underlying asset classes in the Nordic region in 2015 were index and shares, representing 73% and 14% respectively.
NGM launched a securitised derivatives trading platform in Denmark in mid-January in the latest step in the implementation of Boerse Stuttgart's expansion strategy in Scandinavia following its market entry in Sweden, Finland and Norway. Since January, NGM has listed a series of products from Commerzbank including the bank's range of mini futures and bull & bear (leverage) structured certificates.
ETFs/ETPs listed in Europe gathered a record US82bn in net new assets in 2015, according to ETFGI research.
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