NYSE Pulls ETF Liquidity Plan

January 17, 2013

 

The New York Stock Exchange nixed its current plan to help market makers enhance liquidity, which will add difficulties for sponsors of smaller ETFs whose products are stuck in the shadows of larger, more popular products, according to ETF Trends.

The Big Board withdrew its planned pilot program just days before the Securities and Exchange Commission was scheduled to weigh on the proposal, according to the ETF Trends article, which cited a report published on Ignites.com.

Despite choosing not to back the program as currently planned, the NYSE is looking into a revised version of the market-maker incentive program, according to ETF Trends.

Under the proposed Lead Market Maker Incentive program, trading firms could take on the role of lead market maker for ETFs with relatively few assets and low trading liquidity.

Lead market makers in the pilot program would be expected to reach higher performance standards in terms of maintaining tight bid/ask spreads in order to receive payment from the NYSE, the article said.

For the full story, visit ETFtrends.com.

 

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