PRIVATE GROUP COACHING: ETF Trading Basics: The ETF Creation/Redemption Process – Part 2

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Since first movers always have the advantage of momentum competitors, following on their path have not, so market leadership will be guaranteed, for at least a while. However, without continuous efforts to innovate, optimise and expand products and services, being etf trading first mover will get a business enterprise only so far.

Size is very important, there is no arguing about that fact. Size, as in trading volume, allows for high liquidity and, therefore, tight spreads, translating into low transaction costs. Size, as in product range, gives investors more choices which is also a competitive advantage. Assets under management have risen etf trading E million in to E In the same time span, the product offering has been expanded from 2 to 1, ETFs.

While these figures are impressive, they show only the quantitative side. Giving etf trading more concrete picture: Also, investors can additionally etf trading from an increasing number of smart beta ETFs that are structured around factors other than market capitalisation, such as dividends, earnings, or value. So, the wide product range on Xetra is by no means the result of etf trading attempt to outperform other trading venues in terms of choice.

This is a sign of healthy market development and ensures a clear and concise offering to investors. One of the main advantages of ETFs is cost-efficiency, thanks to highly liquid trading and low management costs.

This is the very reason ETFs trading volumes usually do not decline in times of crisis or highly volatile markets. Often, the very opposite is the case, as the Brexit vote has shown recently. So, yes, trading costs should be imperative for an investor when deciding where to trade. One of them is to offer the tightest spreads, in many products unmatched by competitors. The spread in the most liquid equity ETFs on Xetra is only six basis points for a roundtrip order of E, As etf trading investor should know, 80 percent of the costs of a trade are determined etf trading the spread, trading fees are only a small etf trading of the overall transaction costs.

Unlike etf trading trading venues, Xetra does not only claim to have the tightest spreads but proves it via the Etf trading Liquidity Measure, which is publicly etf trading to every market participant, allowing for unparalleled pre-trade transparency.

Another way to facilitate extremely low cost trading is the Xetra Quote Request functionality introduced in April Enabling market participants to trade large volumes of ETFs on-exchange, but without having to fear market impact.

Moreover, Eurex Clearing acts as central counterparty for all market participants trading on Xetra, eliminating counterparty risk and therefore further adding to cost-efficiency.

Xetra is the reference for ETF trading for a multitude of reasons, and size is only one of them. You must be logged in to post a comment. Back Issues Autumn Industry viewpoint: Best ExecutionOctober 7, Best Execution About the author.

Twenty Years of Firsts Xetra: Miroslav Budimir The Xetra intraday auction: Etf trading potential for etf trading price discovery. Darren Toulson reviews the trading performance achieved b Leave a Reply Cancel reply You must be logged in to post a comment. Home Publication Events Login.

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