New regulations are expected to be positive for the European exchange-traded fund market, although trading volumes may not shift to exchanges.

MiFID II, the regulations covering financial markets in European Union that come into force at the start of next year, includes trade reporting requirements for ETFs, which were excluded from the original MiFID rules. As a result investors find it difficult to assess ETF liquidity in Europe, where the majority of trading takes place off exchanges.

Slawomir Rzeszotko, head of institutional sales and trading, Europe at quant trader Jane Street said at the Bloomberg Invest ETF conference in London today that request-for-quote platforms have more trading volume in European ETFs than exchanges in the region. RFQ venue allow institutions to conduct real- time auctions with multiple broker-dealers to achieve best execution.

Rzeszotko said: “Bloomberg RFQE and Tradeweb EU have more volume in European ETFs that the national exchanges.”

Jane Street commissioned the 2017 Global ETF Trading Survey which found that 32% of respondents globally and 41% in Europe use RFQ platforms to submit blocks,The survey, conducted by Risk.net, received 210 valid responses and was conducted between April and August this year.

21% of institutions surveyed by Jane Street reported making ETF block trades of more than $100 million. #BloombergInvest pic.twitter.com/XhhU0Wcgor

— Eric Balchunas (@EricBalchunas) October 5, 2017

Will Wall, trading and operations manager at US-based Riverfront Investment Group, said in the survey that he has been using Bloomberg’s RFQ platform for the past two years. “The old-fashioned way was you’d either pick up the phone and try and call as many people as you can in a short period of time or just send out instant messages and try to aggregate all that information yourself,” Wall added. “The RFQ platform has been very helpful in consolidating all of that information.”

The survey continued that the use of RFQ platforms may continue to increase among European institutions in anticipation of Mifid II. The EU directive classifies RFQ platforms as multilateral trading facilities, one of three types of regulated trading venues.

Rzeszotko continued that MiFID II will have a great impact but ways of trading may not change as using RFQ venues has become industrialised in Europe.

“There will be huge impact on the transparency of liquidity which will increase investor confidence,” he added. “However there are issues in data consumption and it will take time for investors to incorporate it in their workflow.”

David Abner, head of Europe at ETF issuer Wisdom Tree, said at the conference: “Investors want transparency of liquidity. This will drive spreads and trading commissions lower but it will not happen overnight.”

Stephen Cohen, head of EMEA iShares, Blackrock agreed at the conference that MiFID II will be positive for European  ETFs.

“MiFID II will increase cost transparency, drive a shift from closet to actual indexing and change how portfolios are managers,” added Cohen. “The change will not happen overnight but take three to five years.”

Assets invested in ETFs/ETPs listed in Europe increased 28.3% in the first eight months of this year to reach a record of $734bn at the end of August according to ETFGI, an independent research and consultancy firm on trends in the global ETF/ETP ecosystem.

Last year PwC forecast that global ETF assets under management will exceed $7 trillion by 2021 through entering new markets, expanding distribution channels and asset classes. The consultancy said the European market is expected to grow 27% annually and reach $1.6 trillion by 2021.