After the government allowed a portion of incremental flows of EPFO into equities through the ETF route , almost `60,000 crore has flown into such funds . Do you see ETFs gaining momentum among retail investors ? As on September 30 , 2017 , the equity ETF AUM accounted for 9 per cent of total equity mutual fund AUM . It was only 4 per cent of total equity mutual fund AUM as on March 31 , 2016 . In addition to equity ETFs , asset management companies in India have also launched ETFs on G-Secs . Another trend which we are seeing is focused on smart beta ETFs , which have done very well internationally . We believe that ETFs in India will gain momentum in the coming years .

Are ETFs popular with retail investors ? Retail participation in ETFs is increasing . Retail accounts for 64 per cent of total daily trading volume of ETFs . A few financial advisors are advising monthly SIPs in ETFs also , which is a good sign for the industry . Increasing product awareness is going to play an important role in further increasing retail participation in ETFs .

Going by global experience , how do you see ETFs growing in India ? Globally , ETF is more than a $ 4 trillion industry . In terms of AUM , USA is largest followed by Europe and Asia . India is still at a nascent stage as compared to global peers . Even in

Asia , we are smaller than Japan , Hong Kong , Korea , Taiwan etc . However , there is potential to make Indian ETF industry big in the next few years . All the stakeholders need to collaborate to make it a successful product category .

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Even though a lot of money has gone into these schemes , liquidity is still a concern . Is NSE planning to do anything to improve the liquidity in these funds ? Most of the increase in AUMs of ETFs in the recent past has been on account of EPFO , which , essentially , is a long-term investment . That may not directly add to the liquidity .

NSE has been constantly endeavouring to promote ETFs for Indian investors . While Securities Transaction Tax ( STT ) has been reduced significantly for ETFs , liquidity providers , which are Authorised Participants ( APs ) appointed by AMCs , still face high STT for their transactions as they have to constantly provide buy / sell quotes throughout the day . NSE has been working with the government to reduce STT for AP transactions so as to enable them to quote with tight spreads which would help build further liquidity .

NSE has also implemented series of incentive schemes for enhancing ETF liquidity by providing discounts on transaction charges to trading members who invest in ETFs . NSE also incentivised trading members to bring more of their clients to ETFs .