ETF Seed MoneyProblem?

With the recent listing of 40 ProShares ETFs, the ETF seed issue has become more front burner. Roughly $400 million was seeded by three Amex Specialists between January 26th and February 22nd. While the some of the products are starting to gain traction, the three specialists are paying in the vicinity of $70,000 per day in financing. This charge is incurred 365 days a year, no relief on weekends or holidays.

The result of this release and a large number of other recent issues is raising the angst of other issuers who face the prospect of getting smaller seed commitments for their future listings. Historically, the logjams have broken up beforereal problems have occurred but at the least it appears that the level of seed for new products will be lower in the months ahead. Products that once drew $50 million in seed are now drawing in the $10-15 million range.


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