European ETF trading has increased its market share over traditional equity trading with volumes topping $1.5 trillion (€1.4 trillion) in the first half of 2024, according to a Bloomberg Intelligence report.
ETF trading increased 19% year on year, tripling between 2018 and 2024, with trading predicted to grow 12-15% by year-end, the report said.
The increase in ETF trading has been tied to market volatility spikes after COVID-19 and the Ukraine war with investors drawn to products with greater diversification.
It added that since price swings have evened out, equity trading has remained stagnant and ETF trades have accelerated.
The report also revealed that request-for-quote (RFQ) trading accounted for 46% of European ETF trading in the first half, reaching $737.5 billion (€673) in the first half of 2024, up 12.5% versus the year earlier.
RFQ platforms being the dominant mechanism for trading is a trend that has extended from 2023, making up 53.5% of all ETF trades in Europe in 2023.
Lit order book transactions accounted for 25% of all European trading in the first half, while bilateral ETF trades— which include over-the-counter, systematic internalizer and off-book and on-exchange trades—composed 29% of ETF trading volumes.
On-exchange trading still accounts for a small portion of trades, a trend that has been tied to slower retail adoption.
Retail Market for ETFs Expands
Despite this, the retail market has continued to expand, with multiple ETF issuers recently announcing partnerships with neo-brokers, including Scalable Capital announcing in July it is set to offer over 300 Amundi ETFs on its platform.
The findings come as demand for ETFs soars. Investors pushed a whopping $125.5 billion into U.S.-listed funds during July, one of the largest monthly inflows ever. Year-to-date inflows for these products crossed $500 billion for the month, putting them on course to top $1 trillion by the end of 2024—a figure that would eclipse the current annual inflows record of more than $900 billion, set in 2021. Last year, inflows totaled nearly $600 billion.