European exchange Euronext says it is considering moving all its ETF listings to Amsterdam. Currently ETFs trade across seven Euronext venues in Europe.
This is not a done deal however. Sources close to Euronext told Bloomberg that another option would be to have each ETF manager move all their listings to one venue of their choice. The exchange currently views the European ETF trading landscape as too fragmented.
No final decision has been made, but Euronext sources says the exchange group expects to make one next year. Amsterdam, if chosen, might require further integration upgrades to ensure traders are able to access it more easily. The Armchair Trader has experienced no issues with accessing ETFs in Amsterdam to date.
Operational road map in place for Euronext trading
Euronext has confirmed that it has an operational road map in place which will address what it sees as fragmentation in the European trading landscape. This will stretch to listing and post-trade reforms. If implemented, the plans should improve liquidity, deliver tighter spreads and also help to reduce trading costs.
Currently Euronext has seven trading venues hosting ETFs in Europe, with over 50 issuers and more than 3300 ETPs. Fragmentation in the market can be a problem with multiple listings undermining liquidity in ETFs. This can be an issue for hedge funds, for example: one hedge fund we spoke to this week trades ETFs on an intraday basis and moves all ETFs off its books before close of trading.
That said, the consolidation could remove potential arbitrage opportunities within the European ETF market that currently benefit day traders.
Harmonisation of European exchanges
European markets are aiming to introduce consolidated tape as part of a process to harmonise European exchanges in a similar fashion to the US. It is hoped that this will improve market transparency and reduce fragmentation by combining the data from various trading venues into a single electronic stream.
Consolidated tape should allow brokers and traders to get a much better picture of pricing across hundreds of European trading venues. Euronext has said there is a strong case for consolidated tape for non-equity markets as well, including ETFs. It should also allow real time data on transactions to be viewable together with prices across European markets at their time of execution.
