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- ETF Securities' ETCs trade a total of $1.4 billion last week
- ETC trading volume now contributes over 60% of all ETF/ETC trading volumes on the London Stock Exchange (LSE)
- ETFS Short Crude Oil (SOIL) is now the most liquid ETF/ETC on the LSE, trading 150% more than the FTSE100
- Physical Gold ETCs most highly traded commodity, trading $2.3 billion on the LSE in July
- ETCs trading volumes increase by 1,000% during 1H08 to $11 billion
ETF Securities Limited, the global pioneer of exchange traded commodities (ETCs), saw record trading volumes in its Exchange Traded Commodities (ETC) platform over the past 6 weeks. A report issued by the London Stock Exchange (LSE) yesterday showed that ETFS Short Crude Oil (SOIL) became the most liquid product in the LSE's ETF/ETC segment, contributing 22% of trading volumes or $1.7 billion in July. Volumes are continuing to explode with ETFS Short Crude Oil having almost eclipsed July's record in only the first two weeks of August. Physical Gold ETCs were the most popular commodity, contributing 29% or $2.3 billion of ETF/ETC trading volumes.
ETFS Short Crude Oil (SOIL) has shot into first place on the LSE's list of most highly traded ETF/ETCs. ETFS Short Crude Oil traded almost $300 million last Friday, breaking trading records for all ETCs with a new daily record. Trading in SOIL has grown at an extremely rapid rate since it first listed on 22 February 2008, with volumes picking up in early June as the oil price rose quickly through the US$130/bl level. Volumes then accelerated sharply in early July as the oil price began its recent decline from the $145/bl price level. Trading volumes rose from $45 million per week in May to $650 million last week. As a result, ETFS Short Crude Oil traded 150% more than the FTSE100 ETF last week.
Investors are piling into ETFS Short Crude Oil (SOIL) for a number of reasons including strong pent-up demand for a simple, transparent and cost-effective method of hedging portfolios against the risk of a decline in the oil price. It also reflects some investors taking a negative directional view on the oil price after an exceptionally sharp rise. Investors may also be using ETFS Short Crude Oil to implement pair trades against other commodities (such as the popular short oil/long gold trade) as well as pairing purchases of ETFS Short Crude Oil against purchases of certain resource-related equities.
Physically backed gold ETCs also continue to shine. As a result of the LSE's two physically backed gold ETCs, ETCs took three of the top four spots on the LSE's ETF/ETC trading report with ETFS Physical Gold (PHAU) the second most traded ETC. Combined, gold ETCs are now the most popular commodity, trading more than $1.3 billion last month or 29% of all ETF/ETC volume. These volume numbers are consistent with gold being one of the most liquid commodities in the world. Gold ETCs also contribute approximately 50% of assets under management for ETCs, a pattern which is consistent across the world and not just limited to Europe.
In total, ETCs make up two-thirds of all the London Stock Exchange's ETF/ETC trading volumes. Last week, ETCs traded $1.2 billion of the $1.8 billion total ETF/ETC volume. During the first six months of 2008, ETCs traded in excess of $11 billion, more than 1,000% more than for the same period the previous year. ETF Securities now offers more than 120 ETCs which give investors greater choice to implement different investment strategies with the choice of physical, long, forward, leveraged and short exposure to a wide range of commodity sectors. ETCs are simple to access as they are traded in three currencies (Euros, USD and Sterling) and listed on five major European Exchanges including the London Stock Exchange, Euronext Paris, Euronext Amsterdam, Deutsche Borse and Borsa Italiana. Each Exchange has created unique ETC trading segments resulting in trading volumes exploding to $1.2 billion last week. Total assets are approximately $10 billion.
Commenting on the yesterday's trading, Nik Bienkowski, Chief Operating Officer, said:
"We are not surprised that commodities and more specifically gold and oil ETCs continue to shatter records for trading volumes and inflows. "The fact that an ETC now trades more than the FTSE100 ETF is testament to the fact that investors have been wanting access to asset classes other than bonds and equities. ETFS Short Crude Oil (SOIL) adds to this flexibility and accessibility as it was previously extremely difficult for investors to gain short oil exposure.
"With assets growing by nearly 500% in the past twelve months and volumes growing by more than 1,000% compared to the same period last year, ETCs have become an asset class that no one can ignore.
"ETCs have been designed to be accessible, efficient, liquid and low-cost products for investors. Our platform approach to ETCs allows any investor at any time to trade commodities in the same way they can buy any equity. ETCs are listed on five major European exchanges, trade in three currencies and have the largest pool of market makers and Authorised Participants than any other comparable product. As a result, its not surprising that ETCs have dominated LSE trading volumes."
