Interview: ETFs on the LSE

The London Stock Exchange’s Gillian Walmsley on the complementary strengths of the LSE and the Borsa Italiana, the benefits of transparency, and the development of the retail market in the UK

Ben Johnson 20 July, 2010 | 10:50AM
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We recently spoke with Gillian Walmsley at the London Stock Exchange about the exchange’s success in attracting ETF trading volume, the measures being undertaken to further increase on-exchange liquidity, the potential for a “flash crash” on the London exchange, and the growth prospects for the UK retail market.

Morningstar: As one of the leading ETF exchanges by market share in Europe, can you outline some of the key factors that have contributed to the London Stock Exchange’s success in this category?

Gillian Walmsley: Although London has had an ETF sector since 2000, development of the market was held back by the UK tax regime, in particular the application of stamp duty to UK-listed ETFs. Following amendments to the stamp duty regime on ETFs in 2007, we saw a dramatic increase in new listings, as European issuers could list in the UK. Our merger with Borsa Italiana has created a very successful group for ETFs with each exchange offering its own strengths: Italy has a strong retail investor base while the UK is largely institutional. With over 700 ETFs trading on one platform across London and Milan, and a greater trading volume than any other operator, we believe we have a diverse and comprehensive offering: the best in Europe.

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Ben Johnson

Ben Johnson  is director of passive funds research at Morningstar.