Trade Volume and Exchange Listing in the Market for ETFs

Abstract

The flow of assets into exchange traded funds (ETFs) has led to a competition among trading venues. This study analyzes the determinants of share volume and the benefits to listing ETFs. While NASDAQ captures more market share in Nasdaq-listed ETFs, the majority of share volume on the NASDAQ book is from ETFs listed on other exchanges. There is also evidence of off-exchange trading in the ETF market, as a large portion of consolidated volume is reported through the Nasdaq-FINRA Trade Reporting Facility (TRF). Together, the NASDAQ exchange and Nasdaq-TRF account for more than half of the volume in Nasdaq-listed ETFs.