Deutsche Börse was the first European stock exchange to trade listed funds with its XTF segment. Since its launch in April 2000, investors have been able to access an ever-increasing and diverse range of ETFs listed on its Xetra electronic trading platform.
Last year, Deutsche Börse added 177 new listings to the platform, taking the overall number of listed ETFs to 899. Total fund assets on the platform have grown from EUR400m in 2000 to EUR166bn as of January 2012, an annual rate of 73 per cent.
Despite a five per cent decline in assets to EUR156bn last year, ETF trading activity on Xetra reached a record EUR192bn, up 25 per cent from EUR154bn in 2010. Stephan Kraus (pictured), senior vice-president of institutional equity, says Deutsche Börse was very pleased with the segment’s development in a challenging year for the industry and its strong start to 2012.
“We’ve added 40 new products in the first two months of the year and currently stand at 939 products, so we’re well on the way to 1,000,” he says. “Issuers continue to list new funds to address investor demand for markets and niches not yet available in the ETF space.”
ETFs listed on Xetra enjoy advantages including high liquidity and narrow bid/offer spreads, an indicative net asset value (iNAV) that Deutsche Börse requires to be calculated at least every minute during trading hours, and low management and purchase costs with no front load fees.
Deutsche Börse has not only the largest ETF product offering in Europe but a highly diversified one. Funds are available in all major asset classes, as well as strategy, regional and country specific products. The biggest category is ETFs tracking equity indices, with 695 different products.
“We’ve been a European market leader for 12 straight years,” Kraus says. “We now have a market share in Europe of roughly 37 per cent in terms of trading volume. The Xetra network extends over 18 countries; it’s connected to 239 banks and 4,500 individual traders, so it’s a really robust network.”
Some of the biggest and most liquid ETFs on Xetra, based on last year’s trade volumes, were those based on blue-chip indices. Says Kraus: “ETFs tracking the DAX had their highest turnover in 2011, with monthly turnover of between EUR2.6bn and EUR9.6bn – the latter figure occurring last summer when trading was most active.” New products in the high-yield bond space and those based on volatility indices were popular last year, as well as those focusing on emerging markets.
As well as hosting ETFs based on the big equity indices such as the DAX and Euro STOXX 50, the Xetra platform also covers regional markets ranging from Brazil to Taiwan, offering investors a wide range of asset classes and portfolio strategies.
“Our monthly turnover averages EUR16bn, Kraus says. “One reason we are able to offer such high liquidity is because our platform is supported by 25 Designated Sponsors. If an issuer wants to participate in Deutsche Börse’s XTF segment, they have to comply with certain requirements such as registering the ETF for public distribution, appointing at least one Designated Sponsor, and making sure the ETF has an iNAV. This adds to the overall transparency of our listed ETFs.”
He adds: “We’re proud to win this award and feel it confirms our European market leadership. Most of all it’s a signal to issuers and investors that Deutsche Börse is the place to list and trade ETFs.”
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