IU: Moving on to Lyxor, it's now just over a year since you launched in London. How has that affected the geographical distribution of your assets?

Draper: We now have around 40 ETFs listed on the London Stock Exchange, so we've had a busy year. What I would like to emphasize is that, if you're a pan-European ETF provider, around three-quarters of all market-makers are based in London, so it's very important to be here.

Having said that, since most European ETF business is institutional, and institutions will go to wherever the most liquid listings are, it's important to have a beachhead in all the major markets. On a five-year plan, it's also important to have a local presence to be able to attract assets from family offices, wealth management, private banks, IFAs and retail clients. Plus you want to have the right tax wrapper, where necessary.

IU: How would you compare and contrast your product range against the other two members of the "big three" ETF providers in Europe (iShares and db x-trackers)?

Draper: Clearly there's a lot of overlap, as all of us are offering pretty comprehensive product ranges. If I had to pick one area, we think we have the best and most comprehensive emerging markets equity product range. Lyxor pioneered the synthetic replication method, and the Société Générale group has an extremely strong banking franchise in the emerging markets. So it's a natural fit for us to focus on this area.

IU: How do you interact with the Société Générale index team? Only some of their environmental- and global-themed indices have ended up as ETFs, for example.

Draper: Our ETF development reflects client demand, so that will determine whether we launch a new product. In some of the more niche areas, such as frontier markets or alternative asset classes, the SGI team, headed by Yannick Daniel in Paris, is a great asset for us to have in-house, and enables us to move a bit faster when we have a new index idea.

We will always get a third-party index provider to calculate and verify the index in any case.

IU: What other areas of product development are you focussing on?

Draper: Despite the equity market corrections, we're still ahead of our internal targets in terms of units created for equity ETFs this year. But the two big areas of growth for us have obviously been fixed income and commodities. Our EONIA cash fund and the short-dated, 1-3 year Euro MTS have been very successful and we are planning more ETF launches in the fixed-income area.

And in alternative asset classes—where ETF development is more experimental and some launches have been successful, others less so—there are still plenty of opportunities. And, as I mentioned earlier, we're pretty optimistic that equity sector ETFs can start to gain more market share in Europe, and there are plenty of further opportunities to develop new subsector ETFs on a pan-European basis.

Paul Amery is the European correspondent for IndexUniverse.com. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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