Exchange traded funds have not been able to break into the European retail market with as much success as in the U.S. as private transactions and limited trading transparency pervade the European markets, according to a recent report.
In Europe, over-the-counter ETF transactions between large institutions and investment banks account for around 60% of total volume, or two times that in the U.S., reports Emma Dunkley for The Wall Street Journal. European regulators also do not require institutions to report OTC transactions with ETFs, which would limit the transparency of trading volumes and pricing. [European ETFs Face Regulatory Scrutiny]
Furthermore, ETF trades in Europe can be done through different currencies on more than one exchange and in more than one area, which makes it even more difficult to tally total trades in one ETF.
“Even though the London Stock Exchange and Borsa Italiana have merged, for example, there are still unique listings of ETFs in both Milan and London,” Ben Johnson, the London-based director of European ETF research for Morningstar, commented in the WSJ story.