Why MiFID II could boost ETF uptake among UK wealth managers

Enforced disclosure of OTC trades

MiFID II could increase the uptake of ETFs among UK investors by enforcing public disclosure of over-the-counter trades, allowing for a "truer reflection" of how each vehicle is trading, according to Tim Huver, ETF product specialist at Vanguard.

Despite their name, a significant proportion of exchange-traded funds are traded over-the-counter (OTC), instead of directly on a stock exchange, and these deals often go unreported. According to a recent report by Irish law firm Dillon Eustace, some 70% of trades across 1,519 ETFs listed in 21 countries across Europe are not being reported at present, making it difficult for investors to obtain an accurate picture of the volumes and pricing of ETF trades. Additionally, reporting requirements for ETFs vary depending on the European stock exchange on which they are listed. As a general...