If an advisor or institutional investor is unable to execute an efficient trade on the secondary market, a capital markets team will work with market making firms, APs or other sell-side firms to effectively make markets for the ETF trades.
Market makers provide further ETF market depth as they source liquidity for investors by allocating trades that are just pennies off the bid/ask price in the secondary market. In the primary markets, ETF providers and Authorized Participants may identify additional liquidity through the ETF creation/redemption process – the creation and redemption process helps facilitate large block trades in an ETF with low trading activity.
Related: Investing in What Appears to Be an Illiquid ETF
Pollackov will bring over 17 years of experience to PowerShares’ Capital Markets team. He recently served as Managing Director of ETF Capital Markets at Charles Schwab Investment Management, Inc.
“I’m thrilled to be joining Invesco PowerShares, where some of the industry’s first and most successful ETFs were first created,” Pollackov said. “The Global Capital Markets team at PowerShares is a differentiated offering that I believe serves a critical role in maintaining our trading relationships with the market-making community and has potential to bring even more investors into PowerShares ETFs.”
For more information on the ETF industry, visit our current affairs category.