etf and etc market pietro poletto head of etfs london stock exchange group

ETF and ETC market

Pietro Poletto

Head of ETFs London Stock Exchange Group

2

Content

ETFs & ETCs

International Comparison

Emerging markets ETFs: focus on Russian and Eastern Europe ETFs

3

Number of ETFs/ETCs listed on LSE

14 29 46

10713630

56

123

0

20

40

60

80

100

120

140

160

180

200

220

240

260

280

300

2004 2005 2006 2007 2008

Total 259

ETC

ETF

Data Source: London Stock Exchange

4

ETFplus market: segments and classes of products

MTF

--

-OICR Indicizzati

Standard ETFs

ETFplus

Structured ETFs ETCs

Indexed UCITS

Class 1 (Bond Indices)Government BondsCorporate BondsMonetary

Class 2 (Equity Indices)Equity Italy - EuropeEquity USAEquity Emerging MarketsEquity SectorsStyleReal Estate - Private EquityFundamentals

Structured UCITS

Class 1 (without leverage) Buywrite – Covered Call Short

Class 2 (with leverage) Leveraged Long Leveraged Short

Exchange-traded Commodities

Index Commodities Cattle Energy Industrial Metals Precious Metals Agricultural Products

5

5

Data source: Borsa Italiana S.p.A.

8 13 20 30

87

164

226

7

16

47

37

0

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40

60

80

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120

140

160

180

200

220

240

260

280

300

2002 2003 2004 2005 2006 2007 2008

ETC

ETF STRETF

Total 289

Number of ETFs/ETCs listed on ETFplusETF e ETC admitted to listing since September 2002 - as of March 31st 2008

Data Source: Borsa Italiana S.p.A.

6

63

41

20

5

7

36

ETFs and ETCs Issuer Breakdown (by Parent Company) - LSE

ETF

iShares – BGI 59 ETF

Lyxor - Société Générale 29 ETF

db x-trackers - Deutsche Bank 29 ETF PowerShares – Invesco (November 2007) 13 ETF

SPA ETF (January 2008) 6 ETF ETC

Gold Bullion Securities 1 ETC

ETF Securities 122 ETC


7

63

41

20

5

7

36

ETFs and ETCs Issuer Breakdown (by Parent Company) - ETFplusETF

iShares – BGI 80 ETF

Lyxor - Société Générale 70 ETF

db x-trackers - Deutsche Bank 57 ETF PowerShares – Invesco (November 2007) 13 ETF

EasyETF - AXA/BNP Paribas 7 ETF

SPDR e Beta - Crédit Agricole 5 ETF

SPA ETF (January 2008) 6 ETF

SGAM (February 2008) 3 ETF

JP Morgan (November 2007) 1 ETF ETC

Gold Bullion Securities 1 ETC

ETF Securities 46 ETC


8

LSE - trades and turnover

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Daily Average N. of Trades

2007: 1,469

March 2008: 3,806

Daily Average Turnover

2007: £104.5 mln

March 2008: £253.8 mln

Daily Average (Mln GDP)

N. tradesDaily Average

Turnover


9Data source: Borsa Italiana S.p.A.

ETFplus – trades and turnover

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Daily Average (Mln eur)

N. tradesDaily Average

Turnover

Daily Average Turnover

2007: 126.9 Mln

March 2008: 199.4 Mln +55% Y/Y

Daily Average N. of Trades 2007: 5,406

March 2008: 6,228 +45% Y/Y

March 2008highest daily average turnover


10

ETFplus: most traded ETFs - Turnover (first quarter 2008)


ETFTurnover(Mln €)

% on tot ETFplus

1 LYXOR ETF EURO CASH 1244.0 10.94%

2 ISHARES DJ EURO STOXX 50 839.9 7.38%

3 LYXOR ETF DJ EURO STOXX 50 836.8 7.36%

4 LYXOR ETF S&P / MIB 611.8 5.38%

5 DB X-TRACKERS DJ EURO STOXX 50 SHORT 430.4 3.78%

6 DB X-TRACKERS II EONIA TRI 425.1 3.74%

7 ISHARES S&P 500 420.4 3.70%

8 LYXOR ETF DAX 343.1 3.02%

9 LYXOR ETF MSCI INDIA (QUOTE A) 338.7 2.98%

10 LYXOR ETF CHINA 295.7 2.60%

11


ETFplus: most traded ETFs - Contracts (first quarter 2008)

ETF No of trades % on tot ETFplus

1 LYXOR ETF MSCI INDIA (QUOTE A) 43,567 10.94%

2 LYXOR ETF CHINA 27,722 6.96%

3 ISHARES FTSE/XINHUA CHINA 25 20,922 5.25%

4 DB X-TRACKERS DJ EURO STOXX 50 SHORT 18,079 4.54%

5 ISHARES MSCI BRAZIL 15,587 3.91%

6 LYXOR ETF S&P / MIB 14,579 3.66%

7 ISHARES DJ EURO STOXX 50 12,163 3.05%

8 LYXOR ETF EURO CASH 11,937 3.00%

9 ISHARES MSCI JAPAN 10,811 2.71%

10 LYXOR ETF DJ EURO STOXX 50 10,641 2.67%

12

Content

ETFs & ETCs



13

601 ETFsAUM 581 bn$

+ 42,7%

WORLD 2007 1,171 ETFs (+64%) AUM 797 bn$ (+41%)

Turnover in US is 90% on exchange, in UE 50% on exchange (the remaining 50% is OTC).

ETF’s in USA are listed in 4 exchanges; ETFs in UE are listed in 18 exchanges.

423 ETFsAUM 128 bn$

+ 43,1%

Data source: Morgan Stanley “Exchange Traded Funds – Year End 2007 Global Industry Review

14

European Exchanges: market share (contracts)

Euronext23,57%

OMX10,58%

Deutsche Boerse16,76%

SWX5,13%

LSEG43,41%

Others0,54%

Data source: FESE and London Stock Exchange

*Irish stock exch., Wiener Boerse

NUMBER OF CONTRACTS

21,161Others*

3,931,858TOTAL

Feb 07 – Feb 08

659,093Deutsche Boerse

926,927Euronext

1,706,793LSEG

201,771SWX

Exchan.

416,113OMX

15

European Exchanges: market share (Turnover)

Data source: FESE and London Stock Exchange

LSEG19,0%

SWX + Virt-X5,0%

OMX2,7%

Deutsche Boerse39,6%

Euronext31,2%

Others2,4%

*BME, Irish stock exch., Wiener Boerse

TURNOVER (mln €)

7,671Others*

317,893TOTAL

Feb 07 – Feb 08


99,212Euronext

60,442LSEG

Exchan.

OMX 8,715

16,004SWX

16

European Exchanges: average contract size, number of contracts and turnover

Data source: FESE and LSE

25,43%

19,71%

Borsa Italiana

44,23%

OMX

4,13%

AVERAGE CONTRACT SIZE (in mln €)

The bubble size is proportional to the average contract size

20,943OMX

79,326TOTAL

Feb 07 – Feb 08


107,033Euronext

79,320SWX

Exchan.

107,808LSE

24,958Borsa

ItalianaDeutscheBörse

Euronext

OMX

SWX

BIt

Lse

0

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Turnover (mln €)

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ntr

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ts (

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17

Multilisted ETFs: Borsa Italiana market share - the most significant examples (Aug 07 – Feb 08)

Data Source: Deutsche Boerse

PowerShares EQQQ (Tot 594.3 Mln €)

9,7%

71,6%

12,6%3,8% 2,4%

DeutscheBoerse

LSEBorsaItaliana

SWXEuronext

6,0%

32,0%

62,0%

DeutscheBoerse

Borsa ItalianaEuronext

Lyxor ETF EuroMTS 1-3 Y (tot 867.2 Mln €)

8,0%

59,4%

3,3%2,6%

26,7%

DeutscheBoerse

EuronextBorsaI taliana

SWXLSE

Lyxor ETF India (Tot 1393.6 Mln €)

11,0%

42,0%

20,0%

6,0%

21,0%

DeutscheBoerse

EuronextBorsaI taliana

LSESWX

iShare MSCI Brazil (Tot 1451.9 Mln €)

18

Content

ETFs & ETCs



19

Style ETFs 4%Others

6%

Emerging Markets Equity

ETFs54%

Equity Developed

markets ETFs30%

Bond ETFs6%


ETFs trades on ETFplus – distribution by asset class (April 2007 – March 2008)

NUMBER OF CONTRACTS

Apr 07 – Mar 08

80,813Bonds

377,808Developed

makets

690,580Emerging markets

Asset class

71,22Others

Style

TOTAL

56,230

1,276,658Italian Investors are focused on Emerging markets ETFs

20

Italian most traded Emerging markets ETFs - Contracts (April 2007 – March 2008)


0.85%10,821LYXOR ETF HONG KONG (HSI )10

0.93%11,895LYXOR ETF EASTERN EUROPE9

1.90%24,243LYXOR ETF BRAZIL (IBOVESPA)8

1.94%24,711ISHARES MSCI EMERGING MARKETS7

2.19%27,927LYXOR ETF RUSSIA6

2.58%32,952LYXOR ETF TURKEY5

5.89%75,183ISHARES MSCI BRAZIL4

7.91%101,030ISHARES FTSE/ XINHUA CHINA 253

9.61%122,701LYXOR ETF CHINA2

12.17%155,417LYXOR ETF MSCI INDIA (QUOTE A)1

% on tot ETF No of tradesETF

0.85%10,821LYXOR ETF HONG KONG (HSI )10

0.93%11,895LYXOR ETF EASTERN EUROPE9

1.90%24,243LYXOR ETF BRAZIL (IBOVESPA)8

1.94%24,711ISHARES MSCI EMERGING MARKETS7

2.19%27,927LYXOR ETF RUSSIA6

2.58%32,952LYXOR ETF TURKEY5

5.89%75,183ISHARES MSCI BRAZIL4

7.91%101,030ISHARES FTSE/ XINHUA CHINA 253

9.61%122,701LYXOR ETF CHINA2

12.17%155,417LYXOR ETF MSCI INDIA (QUOTE A)1

% on tot ETF No of tradesETF

21

Focus on Russia and Eastern Europe ETFs

ISIN NAME BENCHMARK INDEX

1 FR0010326140 LYXOR ETF RUSSIA DJ RUSINDEX TITANS 10

2 LU0322252502 DB MSCI RUSSIA CAPPED ETF MSCI RUSSIA CAPPED

3 FR0010204073 LYXOR ETF EASTERN EUROPE CECE COMPOSITE

4 IE00B0M63953 ISHARES MSCI EASTERN EUROPE MSCI EASTERN EUROPE

5 IE00B1W57M07 ISHARES FTSE BRIC 50 FTSE BRIC 50

International Monetary Fund says Russian and Eastern Europe GDP in 2008 is expected to grow by respectively 6.5% and 5.2%*

*World Economic and financial surveys – World economic outlook (October 2007)

Exploit this opportunity investing on thefollowing ETFs available on the ETFplus market:

22

Russia and Eastern Europe ETFs turnover, trades (April 2007 – March 2008) and AUM in Italy (end of March 2008)

NAME TRADESTURNOVER

(Mln €)Italian AUM

(Mln €)

1 LYXOR ETF RUSSIA 27,927 303.10 111.4

2 LYXOR ETF EASTERN EUROPE 11,895 179.96 45.8

3 ISHARES MSCI EASTERN EUROPE 8,637 111.54 68.6

4 ISHARES FTSE BRIC 50 2,687 28.91 17.5

5 DB MSCI RUSSIA CAPPED ETF* 13 0.63 0.1

* Listed only starting from March 14th 2008

Russia and Eastern Europe ETFs represent the 4% of the contracts and the 1.8% of the turnover of the whole Italian ETF market


etf and etc market pietro poletto head of etfs london stock exchange group

Documents

etf spa etf

etf data source

etf str etf total

etf securities46

etf sgam

etf turnover mln

etfplus etf e

lyxor etf dax343