Industry Updates

EFAMA: UCITS ETFs could see $1trn windfall from real-time consolidated tape

Industry body urges policymakers to ‘remain ambitious’ in delivery

Theo Andrew

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The European Fund and Asset Management Association (EFAMA) has said UCITS ETFs could see up to a $1trn windfall from a real-time consolidated tape for equities and ETFs.

In a new report, UCITS ETFs: A growing market in volatile times, said around 10-20% of assets under management (AUM) – roughly $1trn – held by non-US clients using US-domiciled ETFs could potentially migrate to EU-listed products if they were able to access real-time volume data efficiently.

“A real-time consolidated tape for equities and ETFs would gradually place the EU on par with the US for ease of data access,” the report said.

“We estimate that around 10-20% of AUM held today by non-US clients (APAC, Latin America and some EMEA) are in US-domiciled ETFs. Representing approximately $1trn, a good portion of these assets could potentially migrate to EU-listed ETF products.”

The findings come as EFAMA has urged policymakers to remain ambitious in delivering a consolidated tape for equities and ETFs given the rising demand for the wrapper.

It said the initiative would deliver “even greater demand for UCITS ETFs” if it included live pre-trade data with venue attribution providing a much-needed view of market liquidity.

EFAMA noted the EU’s legislative process has only taken “timid steps” towards greater transparency and data consolidation, but added it was positive a more robust framework could still be implemented.

In June, the European Council, Commission and Parliament agreed to establish a consolidated tape for equities and ETFs with live pre-trade data, however, without venue attribution.

“With a possibility to review the core data that the tape delivers by June 2026, we hope that a more ambitious consolidated tape can still emerge in time to support the trading and attractiveness of the UCITS ETF product for European and international investors alike,” the report said.

“This will furthermore encourage greater retail demand for UCITS ETFs by improving visibility and lowering trading costs, at a moment where the UCITS ETF market in Europe – unlike the US – remains fundamentally an institutional one.”

EFAMA added a meaningful consolidated tape would also benefit investment in areas such as small and mid-cap stocks and deliver a boost to smaller European markets.

It said when demand rose for these areas – during the COVID-19 pandemic – ETF issuers were unable to include these stocks due to the lack of consolidated liquidity data.

“An EU consolidated tape which includes listings in smaller markets promises to reverse the current dynamics (where institutional investors have to opt into separate and costly data feeds to extract price information),” the report said. 

“Increased visibility and the ease of accessing complete liquidity and price data in a single place will provide a critical boost for smaller markets as well.”

Federico Cupelli, regulatory policy advisor at EFAMA, said: “Our recent findings highlight important facts for policymakers to keep in mind when assessing the potential for UCITS ETFs to deliver on some of the objectives of the EU Capital Markets Union project.

“Their cost-effectiveness and transparency help investors access a growing number of asset classes and strategies, all within the world-class UCITS regulatory regime.

“The introduction of a consolidated equities/ETF tape will help the European ETF market to reach its full potential and attract more global investors.”

In September, Susan Yavari, senior regulatory adviser at EFAMA told ETF Stream a consolidated tape with live pre-trade data, venue attribution and multiple layers of quotes would have been a “win-win” for both the buyside users and the exchanges.

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