ETF trading struggles to gain traction in Europe
Hedge funds in the US were quick to spot the opportunities offered by exchange-traded funds. For them, the creation of a ‘create-to-lend’ market in ETFs was another means of going long or short their favoured sector. Similar moves are afoot in Europe, but market fragmentation means the pace of development looks set to be much slower. Richard Jory reports
Nobody ever expected the trading of exchange-traded funds (ETFs) in Europe to develop in the same way as it did in the US, and for good reason. As well as a cultural divide that sees US investors preferring to trade in equities and Europeans showing a distinct liking for debt, there is also a larger retail investor base trading ETFs in the US.
But the differences in how ETF trading has developed in both continents amount to more than just that. The trading market in the US was developed by the
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