Interested in the potential trading volume exchange-traded funds can bring to an exchange, stock markets are now vying with the
At the same time, however, many specialists on their trading floors are eschewing ETFs because they are thinly traded and, with so many ETFs flooding the market, are taxing the seed money that specialist market-makers typically pony up to get them up and running.
“Some specialists have balked, and the ETF providers have had to invest their own start-up capital,” said
“If a new ETF is not adequately funded, it could have trouble attracting investors,” Morris continued, “and if assets are low, the ETF might have trouble keeping expenses down. It could also cause a widening of the bid-ask spread, another cost of investing.”
Stock markets are responding by offering incentives to specialists to handle thinly traded securities, and
While Amex handles the fewest number of ETFs of any exchange, 20, it does trade the PowerShares QQQ Trust, which helps boost its market share of ETF trading year to date to 47.1%. The NYSE and its electronic trading platform, NYSE Arca, have handled 48% of ETF trading volume, and the Amex, while it trades the largest number of ETFs, has only a scant 3.1% share of the volume.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.