ETP activity up as volatility remains for Q3 end

As the equity markets experienced a volatile end to the third quarter, the ETP market saw a surge in activity.

Total ETP on-exchange turnover in Europe increased by 24% compared to the previous week according to Lyxor, taking the total to €16.8bn.

Commodities saw the biggest share of the increase, with gold and silver doing especially well. Fixed income products also saw a healthy increase of 45%.

This took place as the underlying equity markets continued to fall; the FTSE 100 dropped 14% during Q3, the Eurostoxx 50 had fallen 23%, while the S&P 500 was down 15.6%.

Underlying equity market activity also fell; it was down 9.4% week on week to €117bn, Lyxor reports.

Primary market volumes in ETFs were strong for the end of Q3. Cowen reports a significant increase in volumes in the last week of September, with the focus on iShares S&P 500 and db x-trackers MSCI USA Total Return Index ETF.

BlackRock, meanwhile, has seen outflows of US$42mn in the iShares iBoxx Euro Corporate Bond ETF and also from Taiwan, China and developed market property ETFs.

In the secondary market, Cowen reports that sellers outweighed buyers 4:1; however, this has halved after six consecutive weeks of similar levels. The iShares S&P 500 ETF represented 2/3 of all Cowen's creation orders, with buyers in Germany and Switzerland.

Globally, equity ETFs saw outflows of $8bn (of which $2.6bn came from emerging markets ETF). This is the ninth week of outflows and the longest losing streak since 2002, reports Cowen.

Fixed income ETFs had inflows of $4.3bn, which is the largest in four months. However, it was US and Euro corporate bonds which saw inflows, while emerging markets bonds recorded their biggest outflows since October 2008.

Commodities experienced their largest outflows in five weeks ($1bn), triggered by gold and precious metals.

In the US, the National Stock Exchange reports that ETF and ETN AUM totaled $973mn at the end of September. This is an 8% increase compared to September 2010.

ETFs and ETNs saw inflows of $4.6bn during the month, taking year-to-date net cash inflows to $78.7bn.