ETF Q&A: Mirae Asset Securities (USA) Inc.

Chris Hempstead, Managing Director, Head of ETF & AP Portfolio Rebalance Trading at Mirae Asset Securities (USA) Inc.

Danielle Rutsky, ETF Lead Product Manager at Nasdaq

What role does Mirae play in the ETF trading process?

Mirae Asset Securities USA is committed to leveraging its trading, securities lending and clearing services to provide essential brokerage services to emerging and existing ETF asset managers as well as their sub advisors.  In this capacity we assist in seeding ETFs, global portfolio trading and rebalancing, agency AP create and redeem services, on exchange market making and more. The number of issuers and the growth of assets in ETFs has created demand for these services from a limited number of banks and/or broker dealers who are properly equipped to handle these services.

How does Mirae look at the opportunity to operate as a Designated Liquidity Provider (DLP) in certain ETFs?

We are fielding many calls from new and existing ETF managers who struggle to find market-making assistance where it is needed the most, on exchange.  Recognizing this demand and our ability to satisfy these challenges Mirae has established a modest presence as a DLP.   This is simply a reaction to the concerns and help that managers have when bringing new products to market.

What trends are Mirae seeing for ETF trading?

With more than 3,700 ETFs listed in the US market it is important to recognize that the gross majority of trading AND assets reside in only the top 750 funds.  That said, the number of funds contributing to increases in volume and assets continues to expand.  We are focused heavily on ETFs that trade less frequently than the top 750, mostly because that is where the most amount of help is needed from market makers.

What questions about ETFs are you receiving the most and what questions should issuers be asking?

The most common questions we field on ETFs are related to market quality and expectations, tax efficiency of rebalancing ETFs and the increasing presence of options within ETF wrappers.