As more data is accessible through the new rules, investors who are sitting on the sideline will now have a clearer picture on ETF liquidity and may be more apt to dive in to the market.
“ETF trading volumes have been a bit of a mystery for all market participants. The new reporting requirements provide hard evidence that ETF liquidity is much higher than was assumed by most investors. This should help to persuade more institutional clients that they can use ETFs as efficient tools,” Arnaud Llinas, global head of ETFs at Lyxor, told FT.
Furthermore, the transparency under Mifid II will also help highlight the cheaper costs found in ETFs when compared to traditional mutual funds.
“Transparency on pricing will drive increased demand for low-cost products such as ETFs, particularly among financial advisers and retail investors,” Stephen Cohen, the head of BlackRock’s iShares ETF business in Emea, told FT. “We will see ETFs become a much more significant part of investors’ portfolios across Europe.”
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