Abstract
The European exchange-traded fund (ETF) market continues to grow assets, but liquidity still lags the U.S. ETF market. Fragmentation is the key barrier to higher liquidity and broader market participation. The European market is highly fragmented, with products traded on multiple exchanges. In addition, many trades occur “over the counter” and are not reported on exchange. Real change will require the elimination of some of the structural barriers to a more-liquid market. There are pockets of liquidity, however, where carefully designed products are seeing trading volumes comparable with their U.S.-listed counterparts.
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