The industry is also changing the way it markets ETF products. For example, the NYSE and Nasdaq Stock Market are looking at ways to enhance trading in smaller ETFs by bringing market makers closer to ETF sponsors. The BATZ BZX Exchange is also providing incentives for market makers who quote ETF prices even if they aren’t trading as a way to update price quotes. Meanwhile, actively managed ETF sponsors is considering a new method of getting around the daily disclosure rule that would prevent frontrunning.
Lastly, the traditional beta indexing ETFs space is well saturated. Providers will have to branch out to create innovative fund strategies. Lee Kranefuss, who ran iShares from 1999 to 2010, believes that sponsors will be re-examining ETFs’ underlying indices and benchmarks over the next five years.
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.