Core Insights - The overall scale of the ETF market is approaching 5 trillion yuan, prompting a call for a diversified ETF market maker ecosystem [1] - Leading fund companies are considering entering the ETF market-making business due to rising market-making costs and the need for improved liquidity [2][4] - Current regulations limit fund subsidiaries from participating in ETF market-making, creating a need for regulatory approval for this new model [3][6] Market Dynamics - The rapid growth of the ETF market has led to increased market-making fees, which are a significant concern for fund companies [2][4] - The competitive landscape in the ETF sector is intensifying, with liquidity becoming a critical factor for fund companies [2][5] - The implementation of regulations has made it challenging for fund companies to manage ETF operational costs effectively [2][3] Regulatory Environment - Existing regulations specify that only certain financial institutions, including securities firms and banks, can apply to become ETF market makers [3][6] - Fund companies face restrictions on using their own funds for market-making activities, which complicates their ability to enter this space [3][6] Cost Considerations - Fund companies are evaluating the cost implications of establishing subsidiaries for ETF market-making, balancing potential savings against the need for capital and operational capabilities [4][5][6] - The establishment of a market-making team requires significant investment in human resources and IT systems, which may not be feasible for all fund companies [6] Industry Perspectives - There is a call for more diverse market participants to enter the ETF market-making space to reduce costs and enhance competition [7][8] - The current reliance on a limited number of market makers may hinder the growth and accessibility of the ETF market [7][8] - Industry experts emphasize the importance of aligning ETF market-making with genuine customer demand rather than merely competing for transaction volume [7][8]

Core Viewpoint - The article discusses the potential involvement of leading fund companies in the ETF market-making business, driven by rising market-making costs and the need for liquidity in a competitive environment [2][4][5]. Group 1: Market Dynamics - The overall scale of ETFs in the market is approaching 5 trillion yuan, leading to the growth of the upstream and downstream industry chain [2]. - The increasing market-making fees in recent years are a direct reason for leading fund companies to consider participating in market-making themselves [5]. - The current ETF market faces issues such as a single market-making entity and high market-making costs, prompting calls for more institutions to participate [2][5]. Group 2: Regulatory Challenges - Fund companies face regulatory barriers to directly participate in ETF market-making, as only brokerage firms currently qualify [6][7]. - Regulations require fund management companies to hold fund shares for at least six months, which restricts their ability to engage in frequent trading necessary for market-making [6]. Group 3: Cost Considerations - Fund companies are evaluating the cost implications of establishing subsidiaries for ETF market-making, balancing between in-house capabilities and outsourcing to brokerage firms [10][11]. - The establishment of a market-making team requires significant investment in human resources and IT systems, which may not be feasible for mid-sized companies [11]. - The potential for economies of scale and the complexity of managing market-making operations are critical factors in the decision-making process [11]. Group 4: Industry Calls for Diversity - There is a call for the introduction of more market-making institutions to enhance competition and reduce costs in the ETF market [13][14]. - The current reliance on a few major players for ETF market-making could limit market growth and accessibility [13]. - The article emphasizes that ETF trading volume should not be the sole measure of product value, but rather the genuine trading demand from clients [14].