Where should you list your strategy to create real liquidity?

Why listing choice is becoming strategic

For years, launching an ETF in Europe was a simple recipe: a good index, a competitive TER, a listing on a major venue – and you hoped liquidity would follow. With active ETFs, that logic is no longer enough: you are not distributing a simple beta, you are distributing an investment process whose value depends on whether clients can actually trade it, in size and in all market conditions.

Yet in many active ETF projects, the choice of listing venue is still treated as an administrative detail: you replicate house habits, follow the dominant venue for the asset class, and multiply listings just “to be visible everywhere”. The real question should be: on which market infrastructure – trading and post‑trade – does my liquidity have the highest chance to concentrate, given my active strategy and client base?

The false comfort of the “big listing” for an active ETF

The usual reflex on the issuer side is: “X is the venue that concentrates ETF volumes, Y is unifying its markets, Z remains a must‑have – let’s list where turnover is highest.” The problem: your natural clients – private banks, insurers, funds of funds, B2B ETF platforms – do not all use the same trading venues or the same protocols (order book, RFQ, blocks).

At the same time, the European market remains structurally fragmented:

• multiple listings of the same ETF across several exchanges,
• different settlement chains,
• domestic CSDs versus international ICSDs,
• settlement discipline penalties and shorter cycles with T+1.

The result: an ETF can look illiquid on its “flagship” venue, while real liquidity is split across venues, OTC and the primary market – and the total cost of ownership is largely driven by post‑trade. For an active ETF, this ambiguity is even more dangerous: it can make a good strategy look like an “illiquid product” when the real issue is the liquidity architecture, not the portfolio management.

Fragmentation, ICSDs, unified platforms: where liquidity really happens

The liquidity of your active ETF is not determined only by the listing venue printed on the factsheet. It depends on how you plug your strategy into a given market infrastructure: trading, settlement and distribution all together.

1. Settlement model

• Domestic CSD model: a distinct settlement chain for each listing venue, with frequent realignments as flows move from one market to another.
• ICSD model: issuance and settlement centralised in a single “hub”, cutting friction, operational costs and fail risk – which is critical in a T+1 environment.

For an active ETF, where flows can be more dynamic than for a simple cap‑weighted index tracker, this structural choice has a direct impact on how easily market makers can provide stable quotes.

2. Initiatives to reduce fragmentation

Some exchanges are trying to tackle fragmentation with unified ETF platforms:

• one single listing,
• one consolidated order book,
• one harmonised post‑trade chain for several markets.

The goal is clear: to move from “multi‑listing to reach every country” to “one listing, pan‑European access”, reducing fragmented order books and settlement costs.

3. Post‑trade and T+1: the hidden cost of liquidity

As settlement cycles shorten, every additional complexity in the post‑trade chain becomes an extra risk for:

• your spreads,
• your available size,
• your clients’ ability to deploy meaningful tickets without friction.

In this context, a simplified post‑trade architecture (ICSD, unified platform, streamlined settlement chains) becomes a competitive advantage for an active ETF, especially if you target institutional money.

Bottom line: listing venue is only one piece of the puzzle. For an active ETF, the real question is: which trading + post‑trade setup maximises the chances that liquidity concentrates, instead of fragmenting?

Active ETFs: liquidity is co‑produced

The liquidity of an active ETF is the product of three building blocks working together.

1. Your investment strategy

Tracking error, universe (large cap, small/mid, credit, EM), use of derivatives, capacity – all of these shape how easy it is for market makers to hedge, and therefore how tight and stable they can quote. A systematic “core active” ETF does not create the same operational constraints as a high‑conviction strategy on small caps or hybrid credit.

2. The market structure you choose

One or several listing venues, domestic CSD or ICSD, consolidated order book or not, RFQ access, presence on electronic OTC platforms: every choice affects how liquidity can form and move. A more centralised model (ICSD + unified platform) can limit liquidity silos, simplify market makers’ job and translate directly into:

• tighter spreads,
• more stable depth,
• better resilience under stress.

3. Your actual investor base

The question is not “where are they domiciled?” but:

• where do they trade,
• through which brokers,
• under what best‑execution and post‑trade constraints.

An active ETF can be perfectly aligned with a portfolio need – but misaligned with its users’ market habits. In that case, the product is not broken; the way it is wired into the market is.

Three questions to ask before choosing your listing venue

1. Where do my investors really trade – and how?

You need to identify precisely:

• which trading venues they use,
• which execution protocols (order book, RFQ, blocks),
• what post‑trade constraints their segment faces (private banks, insurers, allocators, pro platforms).

Your internal “natural” venue is not necessarily theirs.

2. Does my settlement model simplify or complicate life for market makers?

The more settlement chains and realignments you impose, the more market makers carry:

• cost,
• settlement‑fail risk,
• operational stress under T+1.

An ICSD model or unified architecture can reduce that friction and translate very concretely into tighter spreads and more stable depth on your active ETF.

3. Is the way I list the active ETF consistent with the way I talk about its liquidity?

If you are promising “pan‑European access, institutional execution, UCITS liquidity” but the product is still multi‑listed with fragmented order books and a complex post‑trade chain, the market will notice. Conversely, a narrative that openly assumes:

• one central venue,
• an optimised settlement model,
• a clear articulation between primary and secondary market,

can be a powerful differentiator in a universe where everyone talks about alpha, but very few talk about executable alpha.

What this changes for active ETFs

The European active ETF market is growing fast and attracting more and more issuers. The next step will not only be about new strategies, but about infrastructure maturity: the winners will be those who have put as much work into the where and how of listing as into the what of portfolio management.

For an asset manager, the real risk is not picking the “wrong” active ETF idea. It is launching a good strategy into a market architecture that does not allow liquidity to concentrate where demand really is – and realising too late that the management promise was solid, but the execution promise did not follow through.

And you – where is the liquidity of your future active ETFs really created?

Together with Ahmed Khelifa, we support asset managers across this entire chain:

• diagnosing your target investor base and their execution venues,
• choosing the right listing model (venue(s), CSD/ICSD, unified platforms) and engaging with market infrastructures,
• translating these choices into a “real liquidity” narrative for product committees and institutional clients.

Open to discussion – via private message or in the comments – if you’d like to challenge your active ETF project or the way your current range is connected to the market.