Brendan Conway of Barron's writes that profitability started to diminish five years ago for niche ETFs when the national market-system plan or "Reg NMS" began to spread trading activity.

Reggie Browne, managing director at Knight Capital Group, tells the reporter that the risks faced by firms in launching new ETFs has increased.

"The value of being the sole firm providing that market pretty much went away," said Browne.

Programs are eyed by NYSE Arca and Nasdaq to "launch tightly controlled pilot programs," which aim to build stronger markets for a number of funds.

Tim Coyne, head of SPDR ETF capital markets [profile], said: "I definitely think these programs could be very helpful in the incubation stage." 

Edited by: HFD


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