T+1 in the US to push ETF spreads wider
Settlement mismatch expected to raise creation and redemption costs
Participants in the $10 trillion exchange-traded fund (ETF) market say US changes to trade settlement times will throw different legs of the arbitrage trades at the sector’s core out of sync – with end investors shouldering the resulting costs.
Firms that act as so-called authorised participants (APs) trade with ETF issuers to create and redeem ETF shares in a process designed to keep market prices aligned with net asset value. From May 2024, when the new rules take effect, ETFs holding a blend
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