The job of the market maker is one of the most important roles in an ETF ecosystem. Market makers are as important, if not more so, in Canada as they are in the U.S. ETF landscape. In this edition of the VettaFi Viewpoints video series, VettaFi financial futurist Dave Nadig sat down with Andres Rincon, director and head of ETF sales & strategy at TD Securities, to talk about Canadian ETFs and Canadian market makers’ work.
The pair discussed the various specific challenges and traits of the Canadian ETF landscape from a market maker’s perspective. They touched on a variety of topics, including the impact of rising rates, the particularities of Canada’s multi-asset and derivatives ETFs, and more. Rincon has worked at TD Securities for the past fifteen years, serving as director for more than half of that period.
The Experience of a Canadian Market Maker
0:45: What’s it like being a market maker and authorized participant in Canada?
1:45: Where do the conflicts show up in your relationship with issuers?
2:30: The relationship manager side of the market maker role
3:30: New money going into more complex, active strategies
4:15: A quarter of the Canadian market is actively managed
4:45: How to manage a risk profile for a strategy without necessarily knowing the underlying basket or asset classes therein?
5:30: Proxies, volatility controls, and homebrewed ranges and metrics to make markets on complicated products.
6:15: How complicated Canadian ETF spreads move at launch
7:30: How has the rising rate environment impacted the market maker, ETF business?
8:30: A huge shift in the minimum creation cost for an ETF in Canada
9:45: Does the rising cost to make an ETF limit ETF innovation?
10:45: How do products like multiasset or derivatives ETFs complicate the market maker’s job?
12:45: The impact of new rules to allow Canadian ETFs to invest more like hedge funds
14:00: Is there something the Canadian retail market really needs right now?
For more news, information, and analysis, visit the ETFs in Canada Channel.