When executing an ETF trade, there are many decisions to make in order to ensure that best execution is achieved. Below is a summary of execution strategies.
|Market Impact Sensitivity
|Client receives price for the entire trade at once, and the liquidity provider takes on the risk of managing the resulting position. Liquidity providers can be put in competition for the trade, allowing for a clear measure of best execution. Client generally benchmarks vs. the quoted NBBO
|Trade executed by buying or selling the underlying basket of securities and subsequently creating/redeeming ETF shares. The client typically receives a price reflective of executions for the underlying basket of securities plus or minus creation/redemption costs. Client generally benchmarks vs. end of day NAV.
Electronic order types using automated, preprogrammed trading instructions. Orders can be measured relative to execution benchmarks based on volume, time or other
metrics. Can be applied to both trading in the secondary market or trading the basket.