Institutional ETF Trading 2018: The Tools Beyond the Tool

Broad-market exposure, functionality as a low-cost alternative to increasingly expensive derivatives, and the ability to put money to work quickly were potential applications for ETFs when they first launched decades ago. That is, their position in the market today is a function of pure adoption rather than a change in design. This combination of growing adoption among a diverse set of market participants and versatile market applications has created a significant technological gap. Within this gap lies opportunity for true market structure evolution if the tools supporting ETFs and underlying markets can coalesce.

As of year-end 2017, ETFs made up an estimated 15.1% of the $22.5 trillion in net assets held by investment companies in the US, more than doubling since 2010. This growth represents an evolution in the application of the instrument from singular exposure to versatile institutional tool. This TABB Group report, Institutional ETF Trading 2018: The Tools Beyond the Tool, examines the growing need for tools that can efficiently and intelligently put together disparate and often incompatible ETF trade metrics with broader market considerations and the extent to which new technology and trading systems are transforming the institutional ETF trading landscape.