FinTuition sees low sec lending levels in European ETFs
18 September 2012 London
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Roy Zimmerhansl of FinTuition and Andrew Howieson of Howieson Consulting examined relative underdevelopment of securities lending and collateral management relevant to European ETF shares in their new white paper.
In the paper, 'ETF Liquidity, Securities Finance and Collateral Management; Maximising the role of European Exchange Traded Funds', Howieson and Zimmerhansl stated that ETFs that are listed in Europe have developed into a significant element of the European fund management industry.
In June 2012, 39 issuers listed 1304 ETFs with assets under management of €215 billion. However, the paper said that “the interactions between ETF investment and trading and securities finance/collateral management are complex and not always fully clear."
“Market participants point to a relatively low level of liquidity in European ETFs as compared to the US ETF market and to potential linkages with the relative underdevelopment of securities finance and collateral management in relation to European ETFs.”
The white paper examined the reasons for the relative underdevelopment of securities lending and collateral management relevant to European ETF shares, recommending that coordinated changes at both individual firm and market levels are required to promote development of an active securities lending market in European ETFs, and driving improved liquidity in ETF trading.
In the paper, 'ETF Liquidity, Securities Finance and Collateral Management; Maximising the role of European Exchange Traded Funds', Howieson and Zimmerhansl stated that ETFs that are listed in Europe have developed into a significant element of the European fund management industry.
In June 2012, 39 issuers listed 1304 ETFs with assets under management of €215 billion. However, the paper said that “the interactions between ETF investment and trading and securities finance/collateral management are complex and not always fully clear."
“Market participants point to a relatively low level of liquidity in European ETFs as compared to the US ETF market and to potential linkages with the relative underdevelopment of securities finance and collateral management in relation to European ETFs.”
The white paper examined the reasons for the relative underdevelopment of securities lending and collateral management relevant to European ETF shares, recommending that coordinated changes at both individual firm and market levels are required to promote development of an active securities lending market in European ETFs, and driving improved liquidity in ETF trading.
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