Tag Archives: deborah fuhr


MiFID II Fuels Massive EU Move Towards ETFs, ETF Options, Sec Lending

MiFID II Implementation Triggers Flow of $50b into Europe ETF Market In First Weeks of 2018; ETF Sec Lending and  ETF Options Growth Expected to Drive EU Financial Markets.

“What we’ve seen for the first time in European ETF trading is really a concerted interest in trading ETF options in Europe. A load of clients use ETF options in the States, but in 2018 — and it’s a culmination of MiFID II (and other factors) — I think there is an acceptance that this is now a practical and attractive proposal for people who want to trade volatility, buy protection or raise income by selling options. That’s really unlocking a whole new dimension in the way end-investors can use ETFs,”

Twenty-five years ago, when SPDR, the original Exchange-Traded Fund (ETF) was christened on the American Stock Exchange with the nickname “Spiders”, this MarketsMuse senior curator was one of the first market-makers on the Amex to trade the ‘new-fangled’ product.  Along with a cadre of other professional traders and floor brokers from that time, we’re now viewed as the original cast of The ETF Story.  A quarter of a century later, ETFs represent $3trillion in assets; a number that some expect to double in size in just a few more years.  Across the US financial market ecosystem, the ETF evolution has transformed investment strategy schemes on the part of retail and institutional investors within the context of equity, fixed income, commodities and derivatives market investment styles. And with the January 2018 implementation of  The Markets in Financial Instruments Directive II (MiFID II), few will dispute that Europe is on the cusp of realizing a massive asset allocation transformation to ETF constructs, as the benefits to investors and industry participants cannot be understated.

Slawomir Rzeszotko, Jane Street
Slawomir Rzeszotko, Jane Street

“Best execution and post-trade transparency are two areas where MiFID II seems to have had an impact on ETF trading,” said Slawomir Rzeszotko, head of institutional sales and trading, Europe, at quantitative trading firm, global liquidity provider and market maker Jane Street Group LLC in London. “In both cases, the changes appear to have encouraged institutional investors to execute more trades via (request for quote platforms).”

For those who are still unclear as to the value proposition of utilizing exchange-traded funds, let us the count the ways, starting with the ability to deploy assets based on investment theme (e.g. industry or index of specific types of stocks or bonds) via an instrument that trades just like a stock in terms of transparency, liquidity and low cost commissions. There’s a host of reasons why retail investors are generally better served to use ETFs vs. Mutual Funds. Let’s not overlook Warren Buffett’s view that index investing is a smarter approach for individual investors. For institutional investors, the list of reasons to embrace ETFs has become equally compelling. We won’t provide a tutorial if you haven’t gotten the memo yet, we’ll simply point you to the text book explanation.  It’s taken a long time for institutional investors in the U.S. to ‘get the joke’, now its time for European ETF Issuers to ramp up the education and awareness process aimed at institutional investors. Here’s a few hints as to how MiFID II implementation is going to benefit those charged with overseeing institutional portfolios, pension assets and end retail clients:

  1. Greater Transparency (which delivers Greater Liquidity)
  2. Lower Cost to Execute (vs mutual funds)
  3. Ability to allocate to specific themes
  4. Portfolio Transition Ease
  5. Securities Lending (Sec Lending) Opportunities (more income to funds that hold ETFs)
  6. Introduction of Options on ETFs–to enable hedging and portfolio optimization schemes.

“When volumes and trading hit a certain critical point, the acceptability of any of those things that trade as collateral becomes more feasible.” The look-through liquidity afforded by the MiFID II rules means “we’re at a tipping point where ETFs themselves are being recognized increasingly as something that can be used in the world of lending. It means the borrow market in ETFs in Europe is moving toward where it is in the States.. A good “borrow” or securities lending market also lends itself to a “functional options market..”

We’ll leave the lengthier explanation to P&I’s Sophie Baker–who put forth a superb dissertation in the Feb 19 2018 edition of Pensions & Investments Magazine titled “Europe in line for ETF boom, thanks to MiFID II”.  MarketsMuse ETF curators also extends a big shout out to “Dame Deborah Fuhr”, who is viewed by most across ETF land as the “Queen of ETFs”.  Her Eminence Dame Deborah is an industry icon and founder of research platform and industry think tank ETFGI. When it comes to objectively framing the ETF value proposition within the European theater, nobody does it better–so we think you should follow her on Twitter.

If you’ve got a hot insider tip, a bright idea, or if you’d like to get visibility for your brand through MarketsMuse via subliminal content marketing, advertorial, blatant shout-out, spotlight article, news release etc., please reach out to our Senior Editor  or email: cmo@marketsmuse.com.



ETP-3-trillion-dollar industry

ETF and ETP: Now a $3 Trillion Industry

Back in the day, when “trillion dollar” was a phrase not even contemplated by film writers, and barely envisioned by financial industry wonks (other than in context of US government deficit), and when even being a billionaire was limited to a universe of less than two dozen people, (e.g. Warren Buffett and Bill Gates 25 years ago), few would have predicted that a category of financial vehicle known as exchanged-traded products (ETP), with a sub-sect comprised of exchanged-traded fund (ETF) would become mainstream. Well, ETPs and ETFs are so mainstream now, assets invested in these products have surpassed $3trillion in each of the past two years.

(Traders Magazine) Assets invested in Exchange traded funds and ETPs listed globally have broken through the $3 trillion milestone for the second time at the end of Q1. At the end of May 2015 the assets in ETFs/ETPs listed globally first exceeded the $3 trillion milestone.

During March 2016, ETFs/ETPs listed globally gathered $45.30 in net new assets, according to research from ETFGI, a London-based market research firm. This marks the 26th consecutive month of net inflows. The Global ETF/ETP industry had 6,240 ETFs/ETPs, with 12,042 listings, assets of $3.07 trillion, from 277 providers listed on 64 exchanges in 51 countries, according to preliminary data from ETFGI’s March 2016 global ETF and ETP industry insights report.

U.S. equities rebounded in March ending the month up 7 percent. Emerging markets and Developed ex US markets also had a strong March ending up 12.5 percent and 7.2 percent respectively. Based on comments from the Fed there is a growing belief that interest rates will be held lower for longer than previously anticipated. The European Central Bank cut rates and announced additional stimulus will begin in April, accelerating the rate of bond purchases from 60 to 80 billion euros per month,” according to Deborah Fuhr, managing partner at ETFGI.

Some ETF numbers, via ETFGI:

In March 2016, ETFs/ETPs saw net inflows of $45.30 Bn. Equity ETFs/ETPs gathered the largest net inflows with $26.30 Bn, followed by fixed income ETFs/ETPs with $14.80 Bn, and commodity  ETFs/ETPs with $2.42 Bn.

In March 2016, 71 new ETFs/ETPs were launched by 27 providers and 30 ETFs/ETPs were closed.

iShares gathered the largest net ETF/ETP inflows in March with US$20.97 Bn, followed by Vanguard with US$9.74 Bn and SPDR ETFs with US$6.25 Bn in net inflows.

YTD, iShares gathered the largest net ETF/ETP inflows YTD with US$24.54 Bn, followed by Vanguard with US$17.82 Bn and SPDR ETFs with US$8.78 Bn net inflows.

S&P Dow Jones has the largest amount of ETF/ETP assets tracking its benchmarks with 27.5 percent market share; MSCI is second with 14.6% market share, followed by FTSERussell with 12.4 percent market share.

Keep reading Traders Magazine story via this link

What’s Next? ETF for Wall Street Women

MarketsMuse post courtesy of extract from Investors Business Daily..Editors clipped original headline: “Wall Street Women Touch Each Other: BrokerDealer ETF Gals Form “WE”

Linda Zhang, Windhaven Investment Mgt.
Linda Zhang, Windhaven Investment Mgt.

“When you put 40 smart and gorgeous women together, great things will just happen,” said Linda Zhang, senior portfolio manager at Windhaven Investment Management in Boston.

Earlier this year, Zhang helped to found Women in ETFs (WE), a platform for women in the industry to connect, support and inspire each other. The idea came about after she ran into an old colleague — Joanne Hill, head of institutional investment strategy at ProShare Advisors — during an Inside ETFs conference in Florida in 2013.

“We looked around this huge conference, there were very few of us who were women,” said Zhang, who is WE’s vice president. “We were convinced there were other people like us. We thought perhaps we can start something.”

Zhang and Hill discussed their idea with Sue Thompson, head of institutional asset management and RIA for BlackRock. Thompson, an industry veteran, responded excitedly. Soon, others came on board: Michelle Mikos, ETF business development director at Invesco PowerShares, and Deborah Fuhr, managing partner at ETFGI, a research firm in London.

On July 31, WE announced its nine-member board of directors. Besides Zhang, it includes Thompson and Hill as co-presidents, Fuhr as external organization liaison, and Mikos as secretary. Industry legend and securities attorney Kathleen Moriarty — nicknamed “SPDR Woman” for her role in the SPDR S&P 500’s ( SPY ) debut in 1993 — also serves on the board.

In recent months, WE has organized professional development events and launched a website as well as a LinkedIn group . The organization now has chapters in Boston, Chicago, New York, Philadelphia, San Francisco, Washington DC, Toronto, London, Paris and Frankfurt.

The Chicago chapter will launch in conjunction with the fifth annual Morningstar ETF Conference in that city on Sept. 17.
Read more: http://www.nasdaq.com/article/women-in-the-etf-industry-launch-a-group-of-their-own-cm381955#ixzz3AvkOuzeh


Credit Suisse ETF sale sparks outflows

ftimesCourtesy of FT’s Madison Marriage


BlackRock’s move to buy Credit Suisse’s exchange traded fund arm has triggered heavy outflows from the unit, experts say.

In January, the US fund house announced it had entered into an agreement to buy Credit Suisse’s ETF business for an undisclosed amount, subject to regulatory approval.

However, Credit Suisse registered $655m (€511m) of outflows from its ETFs over January and February, data from consultancy ETFGI show – the heaviest withdrawals of any ETF provider in Europe during that period.

The redemptions were more than triple the total ETF outflows ($208m) the Swiss company experienced over the entire 2012. Credit Suisse Asset Management has €13.5bn of ETF assets.

Experts say the withdrawals are a result of uncertainty generated by the BlackRock deal, as well as investor demand for provider diversity and declining interest in Credit Suisse’s gold ETFs.

Deborah Fuhr, managing director at ETFGI, says: “[The outflows] are really down to the fact that [Credit Suisse] announced it is selling the business. “Based on the uncertainty of what will happen, people decided not to put more assets in. It is not surprising that they would redeem from these products.”

BlackRock and Credit Suisse both declined to comment on the outflows.

For the entire story from FT, please click here (subscription may be required)

When European ETF Execution Becomes a Stand-Out Factor, PM’s Step Out Orders

logo_financial-news  courtesy of DowJones’ Peter Davy

Dec 10 2012

Exchange-traded funds may be seen as a low-cost investment option but the huge choice of how to trade these products can have expensive consequences for institutional investors.

“It can have a very significant impact. Get a bad execution and you start with a drag on the performance,” said Deborah Fuhr, partner at ETFGI, the research and consulting firm.

In Europe, unlike the US, only a minority of ETF trading is done on stock exchanges. About 70% of ETF trading takes place over the counter, off-exchange, according to ETFGI. That may mean going to an “authorised participant” that is registered to allow it to create or redeem shares of the ETF with the product provider, or simply buying or selling the ETFs without going through the exchange.

For smaller trades and big ETFs tracking a major index, such as the FTSE 100, that may not be necessary. There an investor may trade up to £3m on exchange with few problems. For the bigger trades undertaken by institutional investors and for more esoteric ETFs such as those based on emerging markets or commodity indices, trading on exchange is likely to affect the price (since ETFs on exchange can trade at a discount or premium to the value of the underlying assets they track), requiring them to look elsewhere to avoid doing so, or just to get a better price than available on the exchange.

Thorsten Winkler, co-founder at Frankfurt-based Advanced Asset Management, which manages ETF funds of funds, said it is natural to turn to the investment banks linked to ETFs when looking to trade those products. He said: “You would think they should be able to provide the best execution of their own product.”

In other circumstances, such as trading an iShares ETF, for example, since BlackRock doesn’t have a broking arm, many investors instead turn to specialist marketmakers, committed to providing continual prices to buy and sell ETFs, such as Flow Traders, Susquehanna and Knight Capital.

At Evercore Pan Asset, another fund manager constructing portfolios of ETFs, co-founder Christopher Aldous is keen on WallachBeth, the US institutional broker that entered the European market earlier this year in a joint venture with North Square Blue Oak. It does no principal trading – in which the broker takes ownership of the ETF – but works purely on commission to try to find the best price for clients from marketmakers and other liquidity providers. Aldous said: “For us it is like outsourcing our ETFs sales trading service.”

Laurie Pinto, North Square Blue Oak chief executive, argues that using agency brokers is the only way investors can be sure they are getting the best price. He said: “How can you trade with a marketmaker knowing he is making money out of trading with you – not taking a commission and getting the best price but making money out of the trade? They make their entire living trading against you.”

However, the marketmakers counter that agency brokers have to deal with them. Matthew Holden, managing director and head of ETF trading for Europe at Knight Capital, said: “Agency order aggregators cannot exist without marketmakers.”

For the full article courtesy of FinancialNews, please click here (subscription required)

ETF Market’s “Dame Deborah” Fuhr Launches Independent Research Firm

Debbie Fuhr, the undisputed “Dame” of the exchange-traded-funds industry, and most recently BlackRock’s Managing Director and global head of ETF research and implementation will open the doors of a new independent research firm, “ETF Global Insight” next Monday. Prior to Debbie’s 3-year stint at BlackRock/BGI, she was billeted for 11 years at Morgan Stanley’s London barracks where she was an MD and head of that firm’s  investment strategies group.

photo courtesy of CNBC

As reported by a variety of global business news outlets, Debbie’s new domain “will publish research on the ETF industry as well as providing education and assistance with product comparisons and asset allocation implementation.”  Debbie will be joined in this new  London-based boutique by former co-workers Shane Kelly and Matthew Murray. All three are widely-credited for developing the first ETF industry research reports.

While speaking to FT.com reporter Chris Flood in discussing the new firm, Debbie stated, “All the members of the ETF eco-system have been citing the need for more and better independent education and research to help navigate the now vast array of products that are available.”

Observed  Andy McOrmond, co-head of ETF Trade Execution for institutional broker  WallachBeth Capital and a long-time industry associate of Ms. Fuhr,  “Debbie is an industry icon, and her new focus on providing an independent perspective on the broad array of ETF products will undoubtedly prove to be a bonus for those keeping their fingers on the pulse of the ETF market place.”