Esposito Securities has expanded its ETF seeding activity, it announced yesterday.
The company has recently seeded several ETFs, including three actively-managed Advisor Shares products. These are the Cambria Global Tactical ETF (GTAA), the WCM/BNY Mellon Focused Growth ADS ETF (AADR) and the Mars Hill Global Relative Value ETF (GRV).
Esposito seeded its first ETF, the GRV, in July of this year. It revealed then that the move would set the tone for future strategies, with seeding opportunities pursued more aggressively.
CEO Mark Esposito says "Esposito Securities is pleased to amplify our activity in this arenaand is committed to expanding our participation."
He is urging issuers to contact Esposito for partnership discussions after the company assembled a valuation team to assess opportunities to seed a wide variety of ETF products and asset classes.
Esposito recently published a white paper - Sprouting an ETF -on the seeding process, revealing a significant drought in the supply of seed capital. The paper argues that seeding participants have become hesitant about supplying the necessary capital and cites difficulties caused by the implementation of Reg NMS in 2005.
Incentives are being developed to counter this shortage though. In 2008, NASDAQ increased the rebate per 100 shares from 25 to 40 cents, and exchanges are beginning to encourage multiple participants to seed a single ETF, lowering the amount of capital needed. Esposito's paper stressed the role of issuer innovation in attracting participants.
Esposito Securities says that a commitment to addressing the underserved needs of clients drove its activity in ETF seeding, helping to provide across the board trading services for its clients.
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