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Never forget that ETFs are only really possible due to HFT. Most ETF users do not even realise this, unless they ask themselves "how do ETFs actually work", and
by anthony_r 6y ago
Never forget that ETFs are only really possible due to HFT. Most ETF users do not even realise this, unless they ask themselves "how do ETFs actually work", and they start reading about Authorized Participants.
- ric2b 6y agoCan you expand on this? From my understanding ETF's re-balance quite slowly, once every few months, how does HFT even help, much less make ETF's possible?
- smabie 6y agoETF shares are created and destroyed all the, bringing their value inline with the underlying. So for a S&P 500 ETF, HFT firms are creating shares when the price of the ETF is too low and destroying them when they are too high. It doesn't have to do with how ETFs rebalance, rather how shares are created and destroyed.