Many ETFs Languish. Virtu Wants to Get Paid to Help Fix That
- Obscure rule bans key traders from receiving cash directly
- Highlights ad-hoc nature of ETF regulation as assets swell
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Virtu Financial Inc.’s billion-dollar purchase of KCG Holdings Inc. this year more than doubled the size of its business that smooths trading of exchange-traded funds.
Now, armed with extra clout, the New York-based high-speed market maker has a 20-year-old U.S. rule in its sights. If the Financial Industry Regulatory Authority revises its Rule 5250, Virtu contends, it can help solve a pervasive problem in the industry by breathing life into small ETFs. About 24 percent of U.S. funds saw less than $100,000 traded each day on average in the past year, according to data compiled by Bloomberg.