Core Viewpoint - By 2026, foreign market makers are expected to account for 50% of the trading volume of mainland China-listed ETFs, a significant increase from 33% in Q2 2025, driven by ample liquidity and high asset turnover rates [1]. Group 1: Participation of Foreign Market Makers - Foreign market makers are increasingly active in the mainland ETF market, with at least one foreign market maker among the top ten holders of 356 ETFs as of Q2 2025 [4]. - The number of ETFs traded by foreign market makers could reach approximately 500, as some institutions engage in intraday trading [4]. - The expected participation of foreign market makers in 2026 is projected to be at least 50%, translating to around 700 ETFs [4]. Group 2: Liquidity and Market Dynamics - The mainland China ETF market is the second most liquid globally, following the U.S., with asset turnover rates of 12.7 times in 2025, significantly higher than the U.S. [6]. - Jane Street and Optiver are among the first foreign market makers to enter the mainland market, with Citadel, Virtu, and IMC expected to start operations in 2026 [6]. Group 3: Impact on Trading Efficiency - Increased participation of foreign market makers is anticipated to narrow the bid-ask spreads of ETFs, enhancing trading efficiency [9]. - As of December last year, foreign market makers accounted for approximately 70% of trading in mainland-listed Hong Kong stock ETFs and about 90% in other cross-border ETFs, leading to reduced average bid-ask spreads of 12 basis points and 7 basis points, respectively [9]. Group 4: Leading Institutions - Jane Street, Optiver, Susquehanna, Eclipse, and Hudson River Trading (HRT) are among the largest holders of mainland-listed ETFs, with their holdings significantly increasing in recent years [9].