The new ETFs will combine with improved trading arrangements being introduced this week to give a further boost to investor interest in ETFs. The most significant of these changes is the transfer of all ETFs to SETSmm, the Exchange’s trading platform that combines the price-formation advantages of electronic order book trading with continuous liquidity provision provided by dedicated market makers.
Martin Graham, Director of Market Services at the London Stock Exchange, said:
“ETFs offer a simple, low-cost way to gain exposure to a broad range of indices and asset classes. Whether they are used actively to balance a portfolio, or are held simply to track an index, all investors benefit from the advantages of an easily traded, stamp-duty free product. ETFs are not yet as widely-used in Europe as in the United States, but interest is continuing to grow. We believe the improvements we have made to trading arrangements will result in better liquidity, helping to make them an even more attractive investment.”
Bruce Lavine, Head of iShares in Europe at Barclays Global Investors, commented,
“ETFs are increasingly being seen as a useful tool that delivers institutional level products and pricing to investors both big and small. As the leading provider globally of these funds, we continue to expand the breadth and depth of our product set to reflect the demands we are seeing from investors.”
ETFs were launched on the London Stock Exchange in April 2000. The value traded in 2004 up to the end of August was £3,078 million, a nearly 40 per cent increase on the £2,209.17 million value traded in the same period last year. According to recent figures from Morgan Stanley, since 2003 the London Stock Exchange’s share of overall European transaction volumes in ETFs has doubled, rising from 5.33 per cent in the first half of 2003 to 10.81 per cent in the first half of 2004. There are ten existing ETFs on the London Stock Exchange, including two introduced earlier this year which track indices based on corporate bonds and the FTSE 250.