RBC Warns of ‘Finite’ Market-Maker Capital For ETF Share Classes

Key Highlights

• Should the introduction of dual-share classes in 2026 spur hundreds of new listings, as some industry watchers have called for, the market-making system could run into a bottleneck of sorts, she said.
• “There are some finite resources in the system.
• One that’s very important is, of course, a balance sheet, or capital that is put up by market makers,” Grimba said on Bloomberg Television’s ETF IQ.
• “That is a finite resource that probably is going to be constrained if you see the number of ETFs grow.” Anticipation is building for the first ETF share classes of mutual funds to launch early next year after the Securities and Exchange Commission gave Dimensional Fund Advisors formal approval to do so last month.
• Dozens of other firms are waiting for similar approval, including BlackRock Inc., Fidelity Investments and T.