THETRADETECH DAILY
SPONSORED ARTICLE
ETF industry as a whole attracted more than $ 1 trillion in new investment in 2021 , bringing total assets industry-wide to over $ 10 trillion .
The result has been a treasure trove of diversification and specialisation that allows institutional investors to tailor a strategy based on any number of attributes or themes without ever leaving the ETF ecosystem .
Changing trading behaviors The combination of these two trends – the ability to instantly access institutional liquidity providers with a single RFQ and the emergence of additional risk options in the ETF marketplace – has driven a sea of change in institutional market participant behavior . Most notably , the phenomenon has helped drive a steady increase in cross-asset trading , whereby ETF RFQs are being traded by both fixed income and equity trading desks .
That behavior change is also starting to trickle into other equity-based asset classes , such as equity derivatives , options , converts , single stocks and ADRs which have been gaining traction in RFQ trading volumes in recent years .
Looking ahead , we believe that trend shows signs of continuing into the current period of rising inflation and beyond . As equity products continue to offer institutional investors highly targeted ways to express risk and electronic RFQ trading continues to deliver streamlined efficiency , we believe ETFs will become increasingly important tools in the institutional workflow . Ultimately , as the sell-side continues to get more sophisticated at managing risk and the buy-side looks to use ETFs more frequently , both fixed income and equity ETFs are being managed in the same risk book , allowing a seamless interplay between two silos that never used to cross paths . The end-result of all of this , of course , is delivering a better price to the end user , more liquidity in the marketplace and optionality for desks that take an omni-asset approach .
Issue 1 www . thetradenews . com 23