Seed Money Revisited

The coming calendar of ETFs is fast becoming clogged. With fewer Specialists or Lead Market Makers willing to commit large amounts of seed, Issuers are having to look for alternative sources. Many issuers are accepting much lower initial seed amounts and are then hoping for fast sales to create AUM through subsequent creations.

We are starting to see issuers examine providing their own seed. In addition we are seeing some outside investors pairing with Specialists to provide seed money as a payment for other pieces of business, most typically commission payments on the underlying brokerage.

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