“In a lot of ways the market you are seeing in front of the screen is the storefront,” says Tim Coyne, global head of State Street Global Advisors ETF capital markets group.
The market maker programs are intended to smooth out the challenges of liquidity that the ETF structure is prone to. The electronic markets and structure of an ETF make liquidity harder to judge than it was in the 1990s. [Trading Smaller ETFs]
“If successful they should shrink the spread and increase the size of listed quotes to buy and sell and ultimately increase trading volume, three measures of liquidity increasingly important in investors’ ETF purchasing decisions. The market-maker programs should also have a positive impact on an investor’s financial performance,” Noblett wrote.
Tisha Guerrero contributed to this article.