When your size is $ 5.7 trillion (the volume of assets in
The British financial industry regulator Financial Conduct Authority (FCA) carefully studied the structure of the ETF market and analyzed the operation of infrastructure during periods of turbulence. Introducing the findings
British research officials have confirmed a fact known to anyone in the ETF market. Despite the apparent concentration of ETF primary circulation markets (where shares are created and redeemed), liquidity in a stressful situation can be supported by alternative liquidity providers — Authorized Participants (APs). These are primarily investment banks and trading companies. Participants who are not too active during quiet times enter the market and effectively eliminate discounts or premiums in ETF prices through risk-free arbitrage. This leads to the rapid establishment of a fair price for the ETF stock and removes pressure from the market maker and other liquidity providers.
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