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BATS Chi-X Europe (BATS), Europe’s largest stock exchange, has announced new trading tariffs to incentivise tighter price formation and promote deeper liquidity as it continues its campaign to improve the European marketplace for exchange-traded funds and products (ETFs/ETPs).
On any given day as much as €1.5bn is traded in ETFs on order books across the continent, with at least twice as much traded over the counter (OTC). The majority of activity is concentrated in around 40 ETFs that predominantly focus on commodities and blue-chip indices. To capture more market share and attract more OTC activity on exchange in this critical market segment for European investors, BATS will introduce separate rebates and charges for participants trading ETFs and ETPs in the CXE Lit Book, the largest single order-book the exchange operates.
Mark Hemsley, CEO said: “Over the past two years we’ve worked very hard to improve market structure for the benefit of ETF trading and investing in Europe. The market is significantly undersized – a quarter of the US’s AUM and 12% of the value traded in the US1 – which is a direct result of highly fragmented liquidity and settlement that harm the development of even the biggest ETFs.”
He added: “In the U.S., BATS is the leading market for trading of ETFs and has a stated objective of being the #1 ETF listings marketplace. Notwithstanding the significant issues inhibiting the European ETF market at present, these aims are global, and our continued innovation around ETF pricing is a significant next step in the right direction. With the addition of Laura Morrison as Global Head of Exchange-Traded Products to our existing team, the ETF industry as a whole should expect future initiatives from BATS to improve the global marketplace for exchange-traded instruments.”
In addition, the company will also beginning offering free ETF listings from 1st June. BATS Chi-X Europe currently lists five ETFs in Europe.
In recent months, BATS Chi-X Europe has played a significant role in the development of the European ETF industry:
- In October 2014, the exchange introduced a specific delayed reporting regime for European ETFs designed to bring greater transparency to the market. Developed in close collaboration with a wide range of market participants, this allows trading participants to report all of their European and Swiss ETF trades to BXTR, BATS’ market-leading trade reporting service, rather than multiple national exchanges or trade data monitors. Since October 2014, more than €41.3 billion notional value of ETF trades have been reported via BXTR.
- In June 2014, the exchange partnered with Euroclear Bank and iShares to launch the first ‘internationally issued and settled’ ETF structure .
- In April 2014, the exchange was a co-signatory of an industry letter to Steven Maijoor, Chair of the European Securities and Markets Authority, urging for greater post-trade transparency.
1 According to April 2015 data published by ETFGI, the research and consultancy firm
