The global ETF industry has never been more dynamic, and Asia is now at its centre of gravity. The region has become the fastest-growing ETF market in the world, outpacing both Europe and North America in asset growth and product innovation, with ETF assets across APAC (ex-Japan) growing more than 31% year-to-date[1].
Investors across the region are drawn to ETFs for their liquidity, transparency and diversification, while issuers are rapidly expanding their product ranges to include active, thematic and digital strategies. Yet beneath this momentum lies a critical challenge. As ETF activity accelerates, the primary market infrastructure, the operational engine that creates and redeems ETF units, is coming under strain. Modernising this foundation will be vital to sustaining growth as the region scales toward its next phase of maturity.
A Region in Motion
The picture across Asia is as diverse as it is fast-moving. Taiwan now ranks as Asia’s third-largest ETF market, with US$200 billion[2] in assets and recording some of the highest daily trading volumes globally. This growth is almost entirely market-driven, fuelled by strong retail engagement and fierce competition among local issuers. But Taiwan’s next evolution into active ETFs introduces new layers of complexity. As products become more specialised and issuance more frequent, the need for automation and real-time connectivity in the creation and redemption process has never been clearer.
Further south, Hong Kong represents a different kind of momentum. Long a regional hub for cross-border investment, it now sits at the frontier of ETF digitalisation. The Hong Kong Stock Exchange lists over 170 ETFs, with leading managers such as CSOP, ChinaAMC and BlackRock driving strong participation. The city is also pioneering tokenised and digitally enabled ETFs, which promise to broaden market access and reshape the investor experience. Yet Hong Kong’s adoption of T+1 settlement has exposed operational bottlenecks in how trades are funded and reconciled. Authorised participants often pre-fund trades before cash is received, underscoring the importance of real-time data visibility and streamlined primary-market workflows to manage liquidity and risk.
Emerging and Established Hubs
While Hong Kong and Taiwan capture headlines for their scale, Singapore is quietly positioning itself as the region’s next growth story. The city-state’s combination of regulatory stability, fintech innovation and a concentration of global asset managers makes it a natural launchpad for future product expansion across Southeast Asia. As more issuers establish regional ETF operations, Singapore’s ability to digitally connect and automate its operational infrastructure will determine how fast it can grow into a regional hub.
At the other end of the maturity spectrum, Japan continues to dominate Asia’s ETF landscape, with assets exceeding US$600 billion. While growth there has moderated, Japan remains the region’s benchmark for scale and operational discipline. The Tokyo and Osaka exchanges have long provided a model of efficiency in listing, settlement and liquidity — lessons that newer markets can draw upon as they scale. The contrast between Japan’s established efficiency and the energy of younger markets highlights both the diversity and opportunity that define Asia’s ETF story.
The Common Thread: Growth Meets Complexity
Across Asia, the message is consistent: growth brings complexity. Markets are expanding not only in size but in sophistication, from passive strategies to active, from domestic ETFs to cross-border products, and from traditional to digital asset exposure. Each shift adds operational pressure to systems still designed for simpler times.
The primary market, where ETFs are created and redeemed, remains the area most in need of evolution. Many processes are still manual, fragmented, or reliant on overnight batch workflows. As trade volumes grow and settlement cycles shorten, these inefficiencies risk slowing down innovation and increasing operational risk. To keep pace, the ecosystem must move toward automation, standardisation and scalability, ensuring that infrastructure can support not just today’s products, but tomorrow’s more complex, cross-market offerings.
Building the Infrastructure for the Future
At Calastone, we see this transformation already underway. Our real-time, cloud-native ETF Servicing platform has been designed to address precisely these challenges – streamlining creation, redemption and settlement while giving every market participant full transparency across the transaction lifecycle.
By connecting issuers, authorised participants, custodians and other stakeholders through a unified, automated workflow, we help reduce risk, enhance liquidity and enable scale as markets grow. Partnerships with leading institutions across Asia are demonstrating how this technology can bring the same efficiency and connectivity that revolutionised mutual funds into the ETF space.
As Asian ETFs evolve from local products into globally integrated investment vehicles, modernising their foundations will be essential. The next wave of ETF innovation, from active and digital strategies to cross-border listings, depends on the ability of the primary market to operate with speed, accuracy and confidence.
Setting the Global Pace
The rise of Asia’s ETF market tells a larger story: this is no longer a region catching up to global trends, it is helping define them. With its combination of scale, innovation and regulatory ambition, Asia stands at the forefront of a new era in asset management.
As technology transforms how ETFs are created, traded and accessed, Asia’s ability to connect markets and automate processes will determine its global influence. With modern, collaborative infrastructure, the region is setting the pace for the world.
[1] https://etfgi.com/news/press-releases/2025/09/etfgi-reports-assets-invested-etfs-industry-asia-pacific-ex-japan
[2] https://www.business.hsbc.com/en-gb/insights/financing/taiwan-etfs
