Global agency brokerage Bloomberg Tradebook reportsthat trade volume on its ETF RFQ (Request for Quote) service tripled compared to the same quarter in 2015.
Total notional value traded also tripled in European ETFs as the number of investors actively using the ETF RFQ service grew by more than 50 percent, according to a company press statement.
Market volatility and the demand for block liquidity in ETFs drove the value of the total ETF market last year. Research firm ETFGI reports that assets in global ETFs topped $3 trillion at the end of 2015.
Bloomberg Tradebooks ETF RFQ service launched in 2014 and more than 250 firms in the United States and Europe are clients, according to company claims.
“Institutions are finding new and increasingly strategic applications for ETFs, with 77 percent of them using ETFs to obtain Core Exposures,” said Andrew McCullum, a consultant for Greenwich Associates and author of Institutional Investment in ETFs: Versatility Fuels Growth.
He added, “Additionally, when selecting an ETF to trade, 76 percent consider liquidity and trading volume the most important factor.”
Bloomberg Tradebook developed its ETF RFQ service to address the unique challenges facing ETF investors in the United States and Europe, while also meeting client demand for direct access to liquidity in a greater variety of ETF products, said Kiran Pingali, head of ETF product development at Bloomberg Tradebook.
He added, In the United States, liquidity is concentrated in the top 150 ETFs by AUM, with more than 90 percent of them trading less than a million shares per day. Europe faces its own challenges in sourcing ETF liquidity because of market fragmentation and low transparency due to deficiencies in trade reporting.
