Trading visibility, or the lack of it, is one of the ETF industry's biggest challenges. With over-the-counter (OTC) trading on the rise in Europe, the true depth of liquidity is increasingly hidden, dampening confidence among investors and hindering asset growth.
With MiFID II expected to address non-reporting of OTC trades and efforts underway to aggregate European trading data, a solution is in sight, but will undoubtedly be a complex and lengthy process. As OTC trading continues to dominate an increasingly fragmented market, solving the transparency problem will only grow in importance. According to BlackRock, between 2010 and 2011, European reported OTC trading rocketed nearly 500%, representing a growing proportion of total volume (30% in 2011 versus 7% in 2010). The OTC market, however, is notoriously opaque and experts estimate only a thir...
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