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Flow Traders – Best European ETF Market-Maker and Best Asia-Pacific ETF Market-Maker


Christopher Meyers (pictured), Head UK & NL Institutional Trading, Flow Traders, reports that the major changes that have occurred over 2015 have been surrounding the increase in volumes of ETFs.

"We have had significant increases in volumes as ETF products have gained more and more traction, and the industry is seeing more retail and institutional counterparts using the products which benefits the overall ETF market," he says. 

Regarding MiFID II, Meyers reports that his company is almost MiFID II ready and welcomes the transparency the legislation should bring.

"The volumes coming in over request for quotes systems (RFQs) that the buyside uses to access market makers have really jumped last year. This year we are probably trading almost half of our flows through sort like electronic trading platforms – it's an interesting development and causing an active point of discussion."

For Meyers, another point of discussion is the price war in the ETF industry, as the giants in the industry have started to reduce their fees, under pressure from the increasing amount of competitors. All this makes ETFs even more attractive as an investment tool.

He has also observed that there is an increased discussion based on comparing cost of holding derivatives versus ETFs, where existing future positions are being switched into ETFs. "You also have more and more indices being created, more diversified or broader, whereas futures are based on certain core indices." 

In terms of smart beta, Meyers has seen an uptick in activity, but not the size of inflows that has happened in the US. He expects inflows to follow further maturing of the European ETF space.

"The next two years will see increasing maturity on the institutional side in Europe and we are still in a considerable growth phase. There are so many people across Europe who don't have access to ETFs yet, particularly at the retail end of the spectrum. Inconsistencies across European markets and infrastructure hold the industry back so we are still not there yet."

The second half of 2015 and early 2016 have seen quite some market volatility, something that does not daunt Meyers. 

"Market volatility shows that there are a couple of market makers who are capable of navigating at almost all times, while still being able to price during turbulent times. This demonstrates the strengths and expertise of these market makers," Meyers says. "Market makers continue to put out quotes for ETFs despite the movement in the underlying markets, taking on the risk and making accurate judgement calls."

Meyers welcomes all the issuers who are trying to get ETFs into the retail space in Europe. "Increasing the accessibility of ETFs is important" he says.

"We are almost ready for MiFID II and hopefully we will be able to show the market that there is real liquidity and transparency in ETFs and that the market making community is doing a great job. Market liquidity is a key point in investors' assessments," Meyers says

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