The market maker’s job is to provide the lifeblood of a healthy exchange: liquidity. That means ensuring there’s a buyer for every seller and a seller for every buyer, and at prices as close as possible to what buyers bid and sellers ask.
While that’s much the same for any traded security, in ETFs it’s more complicated because each fund can be composed of many individual securities and because ETFs cover so many different underlying asset classes. Browne’s traders have to take all this into account when they take orders from their customers, then quote prices at which they will buy or sell.
“They have to do this across stocks, bonds, emerging markets, commodities and everything else ETFs hold,” says David Nadig, director of research at San Francisco–based ETF.com. “What they’re doing is managing a moon shot every single day. It’s crazy complex, and it has to work.”
Midwife’s Role
ETF market makers also perform a midwife’s role in backing new funds as they hit the exchange and an educational role for institutional investors who haven’t yet taken the plunge into ETFs. Browne has long acted as both a gatekeeper for new funds and an ambassador for the industry. He’s traveled the world, from Chile to Hong Kong to the U.K., promoting the product to investment funds and stock exchanges -- and picking up business along the way.
Kelly of iShares recalls how Browne, while still at Knight, won a big slice of ETF trades coming from investors in Latin America. Other market-making firms didn’t listen when Kelly told them investment funds in the region were worried they would run afoul of regulations setting firm deadlines for the settlement of trades. Browne won their business by assuring them trades he handled would be settled on time, Kelly says.
Browne is first among equals in the trio that runs Cantor’s ETF team. His partners, also Cantor senior managing directors, are Eric Lichtenstein and Taube.
Constant Push
Browne works with fund providers on new products and recruits trading clients -- the investors who need convincing that ETFs are right for them. He also meets with regulators and exchanges in a constant push to make more ETFs available to more investors around the world.
“The role I play in bringing out new ETFs, that brings competition and innovation to financial markets,” he says.