Nomura’s ETF MTF expands into emerging markets

Nomura’s new venue for exchange-traded funds has increased its offerings to include a wide range of emerging markets instruments.

Nomura’s new venue for exchange-traded funds (ETFs) has increased its offerings to include a wide range of emerging markets instruments.

Navesis-ETF, the fully electronic multilateral trading platform (MTF), has listed 35 new emerging markets.

Nomura and platform partner, global interdealer broker Tradition, said the additions significantly enhance the depth and range of markets which can be accessed through the MTF.

The London-based joint venture lets sell-side banks and market makers trade intraday and at auction using NAV prices in the ETF primary market, with cross asset class coverage.

Leonie Ryan, head of equities strategy and business development at Tradition, said the expansion of ETF offerings comes from requests from users of the new platform who are looking to trade more instruments on the MTF.

“Many market participants find ETF trading inefficient and opaque,” said Ryan. “Navesis has already received a great response from market participants, which is why we are providing more ETFs for people to trade in an efficient and transparent manner.”

Since launching in February, Ryan said the platform had enjoyed promising growth, with all major banks and market makers in London joining up. She said the MTF now has 16 members and a further 15 in the wings.

Aditya Laroia, executive director, Delta One, at Nomura said the MTF’s benefits for buy-side is its ability to potentially help solve the problem of wide spreads.

“Particularly in emerging markets ETFs, you see quite wide bid offer spreads in the primary market. The buy-side will see benefits from a platform that could bring those spreads in,” Laroia said.

The 35 emerging market ETFs launched include a range of DB X Trackers from Deutsche Bank, as well as a number of MSCI-based products from iShares, Lyxor and HSBC. Navesis now lists almost 200 ETFs, covering equities, commodities, fixed income and emerging markets and Ryan said further products and issuer additions were planned.

IOSCO calls for product and price transparency 

Meantime, the technical committee of the International Organisation of Securities Commissions (IOSCO) has proposed 15 principles for the industry and regulators to use to assess the quality of regulation and industry practices relating to ETFs for investor protection, sound functioning of markets and financial stability.

Among the recommendations, IOSCO said ETF exchanges should consider adopting rules to mitigate the occurrence of liquidity shocks and transmission across correlated markets, such as automatic trading interruption mechanisms.

The association believed regulators should encourage the disclosure of fees and expenses for investing in ETFs in a way that allows investors to make informed decisions about whether they wish to invest in an ETF and thereby accept a particular level of costs.

IOSCO also said regulators should consider imposing requirements regarding the transparency of an ETF’s portfolio or other appropriate measures in order to provide adequate information to investors concerning: i) the index (or the asset basket or the reference portfolio) tracked and its composition; and ii) the operation of performance tracking in an understandable form.