In this episode, Douglas Yones, Head of Exchange Traded Products at the New York Stock Exchange, is joined by Nichole Kramer, Vice President ETF Distribution and Operation Services at SS&C Alps, as she discusses the results of her latest whitepaper The Rise of ETFs, and provides key predictions for the future growth of the ETF industry.

Douglas and Nichole discuss:
· The latest publication from SS&C Alps, The Rise of ETFs
· The growth of the actively managed ETF industry
· Mutual Fund to ETF conversions and other key trends
· Why the time is right to enter the ETF industry

ETF Central’s THE PODCAST:

TRANSCRIPT:

Douglas Yones:

Hello and welcome to ETF Central, The Podcast, where we bring the latest and greatest ETF industry perspectives directly to you through in-depth conversations with key thought leaders from across the ETF ecosystem. I'm your host, Douglas Yones, the Head of Exchange Traded Products at the New York Stock Exchange, the Home of ETFs. Now today I'm joined by Nichole Kramer. Nichole has over 15 years of experience in regulatory, distribution, and compliance. Nichole is the Vice President of ETF Distribution and Operation Services at SS&C ALPS, and she has been instrumental in establishing operations and compliance policies and procedures for multiple firms. She's also a well-known author of several white papers about the ETF industry. I'm sure we'll get into some of that today. Nichole, thank you so much for being here.

Nichole Kramer:

Thanks for having me, Doug.

Douglas Yones:

And it's good to have you back. I know you were with us, just boy, it's only been a couple of weeks. You were here in New York City, you joined us for one of our episodes of the Exchange. If anyone listening in hasn't seen that episode, you can find it either by following Nichole on social media or go to etfcentral.com and learn more about Nichole and see her in person. But we're on podcast version now. Let's kick backwards if that's okay with you. Could you talk a little bit about how you ended up into the world that you're in now? A little bit about your background and then maybe from there we'll chat a little bit about you and your team.

Nichole Kramer:

If someone told me when I was in college that I'd be working with ETFs on a day-to-day basis, I would've said, "What's an ETF?" Back then. And fortunately for me, even though I took a much longer path to get into the industry, I originally went to college for aerospace engineering and quickly changed when the market fell out on the whole aerospace engineering and just focused on math and English. And I was like, "What am I going to do with this? No clue." And I ended up working in a consulting company where they did software technology, SAP, Bond, PeopleSoft, things like that. And then I decided to go to the private sector and work for an entrepreneur and philanthropists, really got some great skills there that helped me to come back into the corporate world. And I started at a very small firm.

It was focused on municipal bonds and private placements, and they're still around today. They're doing quite well, but I felt like it was just too narrow of a spectrum for me. I ended up joining ALPS, at the time before SS&C purchased them and started getting involved in a bunch of different things. And in 2015, we went through a whole entire reorg and they approached me to head up the ETFs from a regulatory distribution role.

And that's where I focus most of my time now, streamlined the entire process there. And then I started exploring things about the white papers that I've written. I was at an ETF bootcamp that Tom Lydon used to do, and we started talking about the next shares model that had come out at the time. And he is like, "You know there's non-transparent ETFs that have been filed?" I was like, "What are you talking about?" And we had a long conversation, hit up some of my peeps in the industry like Chris Hempstead, and had long conversation with them. And then I started going down the rabbit hole of what are non-transparent or semi-transparent ETFs? And spent a lot of time talking to the different firms about it and put out two white papers regarding those particular areas of ETFs.

Douglas Yones:

And of course, Chris Hempstead, a previous podcast guest. You can find him on any of your podcast viewing locations. I want to back up. You ripped through quite a few things there, but SS&C ALPS for anyone who is familiar with the firm located in Denver, but you're not originally from Denver?

Nichole Kramer:

No. I was born in California, but raised on the western slope of Colorado, Aspen, Basalt, that whole Roaring Fork valley and went to college in Kansas and came back to Colorado after living on the Flatlands for four years in Tornado Alley. But I really enjoy Colorado just because there's so much that I can do with hiking and go skiing. We went skiing with our friends at GTS, and that was a lot of fun. Colorado has a lot to offer.

Douglas Yones:

Take us a little bit back, you start in aerospace engineering, you're making these turns, you make it sound easier, "Yeah, I went from this firm and then this firm," but there's some big decisions in there, "Hey, I'm going to switch from an engineering role over to this new thing." And then you're working in compliance world bonds. And then now I'm going to get into ETFs. Were there key spots where you had a decision point where you said, "Hey, this looks like the right thing?" Or what was it that drew you to these successful moves, if you will?

Nichole Kramer:

I think it had to do with the fact that when I came over to SS&C ALPS, I was doing a lot of advertising review and we review mutual funds, private placements, and ETFs. And I immediately started to find that I was really drawn to what ETFs were. And in the grand scheme of things, there's a very simplistic approach to them that they can do so many different things and they have different thematics or strategies behind them. And I was really, really drawn to that. And I kept picking up the clients that were focused on ETFs to really get to know them. And I think that was the turning point for me, that I knew that that was where I wanted to focus all of my energy and time and education on. I don't know, it was just one day I was like, "Hey, I really like what ETFs are." And I wanted to do more with them and find out more.

And when we went through the whole reorg and they asked me to take it on, they didn't think that there was going to be a long runway. My boss at the time, he is like, "I think this is five years for you Nichole." And here we are years more later down the road, and he's just like, "I can't believe how much you have done with educating people in the company about ETFs as well as educating the world." And I try to write in a way that someone like my dad would understand what it is that I'm trying to get across. If I figure that my dad who has no knowledge about ETFs, I figure that most of his friends don't have that knowledge as well. And I wanted to be able to communicate and educate that type of audience so that they would have a better appreciation for something that's only been around for 30 years.

Douglas Yones:

I want to bring up the fact too, for anyone who's listening, if you don't know SS&C ALPS, they've been a part of the ETF industry since the very beginning, and almost in my mind, a little bit of an unsung hero. When you're in the industry, everything that your team and your company provides with respect to many of the largest ETFs in the world every single day are being managed from your side of the business by the SS&C ALPS team. The other thing is your team, not only are they about the nicest people in the world, if you've ever spent time with Andy or Ryan or Layton, and of course Nichole, you're here, but there are other members of that team who as they grew up through the industry, have gone off and sprouted their wings and built a lot of other businesses that are dominant players in the ETF ecosystem.

To some extent, your firm has grown all these major executives around the industry and a lot of major firms. Is there something culture-wise that you've just seen as to why that is? How are you able to breed so many leaders across the ETF ecosystem?

Nichole Kramer:

When you think about it, when the idea of an ETF came to life back in 1989 is when the filing was first made, there was no firm out there that had ever done anything. And ALPS at the time was approached and they said, "Hey, do you think you can do this?" And of course we were like, "Sure, let's do it. Let's find out more about it. Let's be the pioneers with the other firms to bring this to life." And I think the nature of the fact that people that were here at that time, I wasn't, but at the time, they really wanted to make their mark. And I hear stories about that filing, and I hear stories about country caskets, which it was lovingly nickname was country baskets, but there was just so much that they would tell a talk about that history of being part of these different things.

And I think the fact that they were emboldened to take the lead and to educate the world and bring something to life that had never been brought to life before. And that's one thing that I have seen even to this day. And even though we've gone through acquisitions with DST and then SS&C, the people that are around me, they still pushed you to be the best person that you can be and to continually rise above just your normal day to day operations of what it is that you do.

And they're always coming to me and they're like, "What are you going to write about next? What are you are you going to write about next?" And I'm like, "I don't know." I'll be on a walk and I come up with an idea and I'm like, "Hey, what about this idea?" And they've always embraced people that have wanted to push themselves to do more. And I think that's what has bred so many great leaders that have gone on to build these other businesses, whether that's here in Denver, which a lot of them have gone to new businesses here in Denver and built up some new things as well as branch their wings across the United States. And it's really empowering to see that.

Douglas Yones:

And I know I've been to your office a number of times over the years, and I just always, like my very first visit, I remember Jimmy Stegall came, met me in the lobby, and he brought me up and we actually started on a floor that wasn't the floor we were going to, just so he could take the time to introduce me to all these different members of the team that I wasn't interacting with, but that I should know that were great people, and then spend time letting me know, and Andy telling me about all the different roles than you. It's just an unbelievable culture there. And it's the people that make that culture. With that, and an invite for anyone out there who, who's thinking about getting into the business, reaching out to, of course, anyone on the SS&C ALPS team, talk a little bit about your group. Where are you spending most of your time these days?

Nichole Kramer:

We spend most of our time educating potential and new clients, new entrants into the ETF business. Everybody now that 6c-11 has passed SEC 6c-11, it really has made a difference as to what firms are thinking about that they have traditionally been in mutual funds or private placements or SMAs. And they're seeing that they can do so much more and have the liquidity that they really need as well as grow their assets. We spend a lot of time educating them about how does an ETF work, how does the ecosystem work. There's so many different players, and I always like to blow their mind, be like, "Hey, this is how a mutual fund works." I have this nice little graphic and a slideshow, and then I get to the next slide. And it's just like a small slice of the ecosystem to show them this is how an ETF works.

And it's very, very different. And then I love to blow their mind. ETF trends has this great massive ecosystem that they've put together. I'm like, "And this is what really what the whole entire ecosystem looks like. This is just a small part of the role that we play. This is where you land. These are the people you need to have relationships with, and how do you get those relationships in those introductions." And that's where we spend a lot of time. And then my core team spends a lot of time on the day-to-day operations. That's reviewing the creation redemptions that come through from authorized participants. They're sending out communications, we're involved in launch calls, which as we know, there's lots of launches going on. As you turn around and there's four or five launches on a given day or in 10 within a week. It's just crazy. You're on to have to be on top of all of that and know exactly what's going on with each of your clients.

And then I work a lot with the different departments. Most people, I don't think when they hear SS&C realize that we can do everything that you need for your services, the fund accounting, the fund admin, the tax, the legal, CCO services, and of course the regulatory distribution role, which includes advertising review, the creation redemptions, negotiating agreements. The only thing we really can't do is be a custodian because we're not a bank. And I don't think Bill Stone is going to go get me a bank anytime soon. He's got enough regulatory matters to think about as opposed to putting the bank into it. But we do work with all of the custodians out there that are in the business. We have a really great relationship for it with them. Wherever they want to plug and play, we can do that.

We can do a whole full service, which we call a turnkey end-to-end solution, or they can pick certain parts of those services and do it a la carte. That is really helpful. And then we also have a series trust, which I don't think people realize that they can slot their ETFs in, and which is a really great way for small firms to get into this without having to go get a board and set up a trust and they can spread the costs around with the other advisors that are in there. And I think that that's really important for people to understand. And the other thing we can't do is we can't be an exchange.

Douglas Yones:

Not everyone can be an exchange, but seem like you can do everything else. And I think that's the point, is if you're listening in and you're not doing ETFs today, you're not a part of this industry, but you're looking at the growth rates that we're seeing and you're thinking, "Hey, maybe I do want to enter. Either I have an idea or I'm using, I'm running mutual funds today and I want to convert those," we'll get into some of that. Please reach out to Nichole and someone on her team, or if you can't find her, reach out to me. I'll connect you because they can do it all.

And what I think is really interesting too, makes you unique is you can also slice and dice some of those services up. Not everyone has to agree to every service. They can do what's best for them. And the team's been there since the very first ETFs were ever launched here in the United States. Nichole, you recently published a white paper, it's titled The Rise of ETFs. I have a copy right here, you'll be happy to know in my office. I'm holding it up on screen for those that can't see us, tell us a little bit about it.

Nichole Kramer:

It's funny. Everybody was asking, "What's going to be your next white paper? What's going to be your next white paper?" After I finished the last one, I was like, "I just need to break people." But last fall, we had a big event for SS&C called SS&C Deliver. And we had a panel, which Doug was on, and we had a bunch of different charts that talked about ETFs and how ETFs have come to life and where they were at. And it really sparked an idea for me in those conversations that these charts were so good and the data was so good, which I really owe a lot to the New York Stock Exchange because they helped me with that, was a huge contributor on it. But it gave me this idea of, let's go back to the beginning and look at how far ETFs have come and how long did it take for ETFs to get to where we're at with the AUM, with the types of ETFs, with the different types that have come to market.

And I really wanted to bring that to life so that people could have a one-stop shop of, "Here's the history and the rise of how ETFs have come to life in the last 30 years." And I think that that's really important for people to just pick up the paper because it is an easy read people, don't worry, I don't get too deep into the weeds and try to lose you, but it is this really easy read that, like I said, my dad could understand it. And I think that that's really important is that when you have people that can understand something, we always use the term here, if a kindergarten teacher can understand it, then you've done your job the right way to explain everything and not to diss on any kindergarten teacher. You want to take it down to that very basic level and write it in a manner that everybody can understand, even probably the kindergarten kids can understand.

Douglas Yones:

I agree. At the New York Stock Exchange, all the work we do around education, we get hit all the time on a request of what background reading material do you have for someone coming in, for the interns this summer that are across our entire industry, what could they read to learn about more? This is absolutely in the list, even though it's called The Rise of ETFs. And I have to admit, as the dork I am, my concern around Terminator movie, Rise of The Machines, I believe there's also The Rise of Skywalker for the Star Wars people. I appreciate you leaning in there and making ETFs feel ominous. It's not an ominous read, it's actually really well done. Please reach out, or of course we'll link to this in social media when we do publish live.

Let's talk a little bit about the paper. Were there key findings in there? I'll put it out two ways. One is, what's someone who's going to be really lazy, I have a friend Mark who doesn't like to read, if Mark's listening in, what are some of the key findings he might be intrigued by that will force mark to pick up this white paper and go read it?

Nichole Kramer:

I think first of all, the dramatic increase of ETF, AUM, you think about it. It took a really long time just to get to two and a half trillion, and then we finished 2021 at 7 trillion. That's 186% increase, which is just mind-blowing. And I think I read recently that we are crossed around 10 million in AUM which you think about that. That's 10 trillion in AUM. That's a lot. And that's because we've had so many new issuers come to market. We've had very chaotic markets. And I think that the fact that ETFs have really still grown in AUM where you've seen others become negative, the fact that mutual funds were negative for quite some time from 2018 to 22, but positive for ETFs and those markets were not the greatest markets.

We had some great highs, we had some great lows. And ETFs really have weathered that chaos. And I think that that's important for people to understand that how well ETFs do in a chaotic market. I think also what's really interesting is that there was a large move of traditional index-based ETFs to active ETFs, especially under the ETF rule. And I think that that's important for people to understand if you have a strategy, you can do that in an active manner with ETFs. And still, people are always worried about giving away the secret sauce and that's why we have the semi-transparent ETF models. But I think people have realized that active ETFs, you can still hide some of that strategy with them, but still be fully transparent. Obviously they're doing very, very well. That's where everybody's moving to.

And I think that that's really important because most of those years you're talking to over a 200% increase each of those years. I think the other big thing is the increase of mutual funds to ETFs. We had a lot in 2022, we had a lot in 2021. There's a lot of filings going on for this year. We've already seen conversions of SMAs and mutual funds into the industry. And I think that that's something that people should really think about that you can do it. It doesn't have to be a mutual fund, it can be an SMA.

And I think the key thing that I found, which was really interesting is the uphill battle ETFs face with the defined contribution plans, a tax efficient product and a tax advantage account doesn't necessarily yield any additional benefits. And I think that that's something people are always asking about, "Why can't we have an ETF in our 401(k)?" And there's a lot of nuances to that, but I think the fact that you can do so much with an ETF, that's what really people should take away from the paper.

Douglas Yones:

For sure. And it's always been, I think, amazing to me that you referenced this early is great market conditions, ETFs do great, terrible market conditions, ETFs do even better. And it's just been a phenomenal growth and that doesn't seem to be slowing down. In fact, it seems to be speeding up. I wanted to talk a little bit about active ETFs because this tends to come up I think for both of us on a lot of different panels. We saw the entry of firms in particular that I think about Dimensional, CAP group, firms that have always had this aura around them of active management, they had some hurdles to get to maybe for you and I as retail, but also for a lot of advisors, there were a lot of hurdles to access those firms and some of their active management.

And they've entered the industry in the last few years and have done unbelievably well, by every success measure, are you surprised at all? Do you think that you look at the history, I look at the graph in your white paper around actively managed funds, is that going to get even bigger? Are we going to surpass everything we're seeing? What's your take on the actively managed ETF industry?

Nichole Kramer:

I definitely think we're going to surpass anything that we've even thought about or even predicted that would happen. It's not surprising that firms like Dimensional and Cap Group have gotten into the business and gotten into doing active ETFs. I think it's because we've seen some firms out there like JP Morgan, Goldman Sachs, who had traditionally also done mutual funds and they came into the ETF world in I think 2015, 2016, they started launching their first ETFs. And I think that when you look at firms like that Dimensional and Capital Group, they saw that you could do it. You could go from being a traditionally mutual fund company and if you put the right people in place and you took your right strategies to convert them or to launch those products, it makes a difference. And I always talk about this, that you have to have the right people in place to make your ETFs work.

You can have a great idea, but it doesn't work without the people. And that's what we're seeing, these firms, they're hiring the right people and they saw how the other firms that I mentioned have set up their ETFs and brought them to market. And that really makes a difference. And I've seen that Capital Group, they hired a previous capital markets person from another client, another large firm that has been in the ETF business for a really long time. And that makes a difference. You have to have a good capital markets person to help you navigate the system and to help you get to launch because going to make the difference because talking to the market makers and they're talking to the APs to make sure that the strategies that they're looking at are going to be right for the industry.

Douglas Yones:

I want to talk a little bit about not just active, but the idea of semi-transparent active. For those that are listening in, you might even be surprised that there's as active, that actively managed ETFs are as successful as they are. In fact, this year we've been breaking records in terms of cashflow coming into actively managed ETFs. And I think one of the early cuts, somewhere around May, when we were pulling data, my team had noticed a third of all cashflow for the year was in actively managed ETFs. And by the way, Nichole mentioned my team supplies a lot of data. We have a wonderful report. It comes out every two weeks. It's all about the actively managed ETF industry. You can subscribe for free on homeofetfs.com. You can also find it on ETF Central, but feel free to subscribe to that newsletter.

You'll get all this data. I want to talk semi-transparent, this is, "Hey, I'm an active manager. I'm not going to show my holdings every day. There's a number of different solutions out there." I think you and I have debated this in the past. Sometimes we're on the same side, sometimes we're not before, and I'm not going to blindside you with stats after you talk, I'll give it to you before. Right now there are 17 ETFs following the New York Stock Exchange model with 3.1 billion in assets, which to me feels pretty successful only a couple of years into this. You know where I stand on this, but Nichole, what's your take on the semi-transparent ETFs? You highlight them in the paper, do you think that's an opportunity for growth?

Nichole Kramer:

If the SEC will broaden the investible universe, I think that it really can be an area for growth. Think about it, right now it's only those securities that trade contemporarily with the United States. You can't have any foreign securities. You can have an ADR, but you can't have the foreign securities like you can in an active transparent ETF. And I think that that's key element to build up the growth of the semi-transparent ETFs. I'm hoping my gut tells me that the SEC will approve those before we see a Bitcoin ETF out there, just because they have proven that they are successful, those that have launched and the spreads are as tight if not tighter on the semi-transparent ETFs, which I think people were worried that those spreads were going to be so wide and they were launched during some very chaotic markets.

It shows that they have the staying power. But I do think the SEC does need to broaden that investible universe. I do think also that NYSE and Fidelity have done a lot for those that are licensing that particular model. You guys are helping them in a marketing perspective. That gives them a lot of exposure. Fidelity is putting them on their platform, which as we know, it's very difficult when you have a semi-transparent to get it on those platforms out there. I think the fact that why so many have leaned towards your model and the Fidelity model is the additional benefits that they're getting to help those be successful.

Douglas Yones:

I couldn't agree more. The need for the SEC to review the exemptive relief and add international securities to me is, will be the breaking point that that's for the majority of asset managers that have licensed the NYC model but are sort of sitting in the background waiting. That's what they're waiting for that. And that makes a ton of sense. We're in agreement, but I do think there's so much opportunity, so much growth. The reality is there's more money in the actively managed investment world than in passive. And if I'm a star manager, I'm concerned about things like front running and piggybacking. And the idea that you can hide this, and again, I invite you to go look at the newsletter we're producing, you'll see that many of the semi-transparent ETFs where they're not showing their holdings every day are actually trading tighter than the general ETFs in the market that do.

The models work now, it's just getting all securities involved. Let's talk a little bit about ETF conversions. You, your team, you've clearly been involved in a number of these conversions. Five years ago, it was like the holy grail, the idea, "Wow, we'll take a mutual fund and we'll convert direct from mutual fund to ETF you'll be able to bring with you your track record, your history, your AUM, you'll get size, you'll get scale, you'll get all these beautiful things." But no one ever thought it would happen. Then it did happen. And now as you mentioned in your earlier comments, we're seeing not just mutual funds, but I think completely off my radar was the idea that people convert SMAs directly into ETFs because that's now popped up. The pipeline's unbelievable. We've converted at least 60 billion. That number I looked going forward, I know of at least I'll say 15 public filings between now and the end of the year. I know about a lot more non-public. Is this the major growth area that the ETF industry is going to see for the next decade?

Nichole Kramer:

I think so. 6c-11, we talk about 6c-11. That really made a difference because you can get to the market faster, you can file without having to go through these long process to get your exemptive relief. And that was the key turning point. It's crazy to think about you got all these semi-transparent models approved and then just a few months later, 6c-11 was approved and went into effect and it was this game changer in the industry, which is why we see so many new entrants. And I do think the fact that it is so much easier to convert now under 6c-11 and that you have, there are two methods of going about it to convert it. Most everybody is taking the very easy route and not having a shareholder vote, which is certainly the way to go about it to get it done quicker.

But I do think that we are going to see a lot more of these down the road. Like you said, the public filings, there's at least 15 that we know of. Both you and I have heard about some of the other ones that clients are thinking about. And it is this way of not only retaining your clients and your assets, but it's a way of growing it and giving it to them at a lower fee. And people are really fee conscious of late.

I think that people are taking a different approach at looking at how their investments are being done and they want something that's going to be cheaper and they want the liquidity. And that's what the ETFs offer is that liquidity that you can get where it's much harder in a mutual fund plus ETFs are done in kind for the most part, and that's going to reduce your taxable gains and be a little bit more tax efficient. And everybody please consult a tax consultant. I am not a tax advisor. Make sure that you're consulting your tax advisor to make sure that what it is that you're doing as well as your financial advisor is the right approach before investing.

Douglas Yones:

For sure. Neither of us are lawyers or tax advisors, but the reality is ETFs tend to be much more tax efficient. And I think about especially years like last year where the equity markets and fixed income markets both were down so much. And then as an investor, if you were in a mutual fund where people withdrew, probably very likely we saw about a trillion dollars leave the mutual fund industry. Those mutual funds had to sell to raise cash, which created a lot of cap gains for people. All of a sudden you're sitting in the fund doing your role to just invest and you're getting hit with capital gains, when if you are in an ETF, the likelihood of that happening is so low. I think that woke up a lot of people last year about, "Hey, maybe I want to be in a more tax advantage wrapper." Take out your crystal ball for me, Nichole, you look into the future, any key predictions out there?

Nichole Kramer:

Besides the more conversions and more active ETFs? Yeah, I think we're still seeing a lot of thematics come to market. We just had some new ones come to market this week around the music industry. I think that that's not going away anytime soon. I do still think that, we talked about this when I was at the exchange, the single security ETFs, whether that's a stock or a single year treasury, I think we're still going to see a lot more of those. Obviously a big thing that has weathered the market is the defined outcome or buffered ETFs. Even BlackRock now is trying to ride on the innovators and other success in that area and they're seeing that these do work very well in the markets.

I do mention that I do think that we are going to see the SEC broaden that investible universe on the semi-transparent ETFs. And I do think that that is going to be a game changer. And I think more importantly is when we talked about this, is that I really hope that Perpetual is successful in their exemptive application for the active ETFs as a share class. I think that, if it is approved, is going to be a huge game changer for those in the mutual fund industry to be able to get that exemptive relief and mirror what Vanguard was able to do, but in that active wrapper. And I think if that happens, we are going to see the ETF business just skyrocket farther than anything that we've ever seen before.

Douglas Yones:

I couldn't be more bullish on that application. I've been working not just with the Perpetual group personally, but also with some of the law firms that are working with other clients, looking at the multi-share class structure. If you're out there and you're thinking about it, please make sure you're reaching out to Nichole, reach out to me, we'll happily have a conversation, get a little bit more into the weeds and talk about the process for getting exemptive relief. I couldn't agree more. I think that could be game changing for a lot of asset managers out there.

Nichole Kramer:

And I think there's one more thing that we're going to see more of, and that is ETF's listing on the floor of the New York Stock Exchange.

Douglas Yones:

Thank you for that highlight.

Nichole Kramer:

The possibility of this really becoming a trend. I think that you guys recently put out a report about the efficiencies that those firms are having. I think that the paper was about how they are compared to just digital alone and the efficiencies of that. And I think people should go out and read it. I think you had out on the ETF Central as well. It is right?

Douglas Yones:

It's on ETF Central's website and thank you for noting that. It's one of those things, it's a little more in the weeds for us ETF nerds if you will, where we really dig into market structure. But the reality is when you talk to ETF issuers, and when we talk to mutual fund companies thinking about ETFs and we say, "Okay, what are some of the challenges you might face?" The number one objection that salespeople in an advisor's office here is about liquidity. And here at the New York Stock Exchange, we focus a lot of time on how do we solve that objection so that it's not an objection. And we work on liquidity programs and trading programs and all these things to incent liquidity day-to-day on ETFs. But the one spot that's always been a little bit of a pain point for our industry has been the auctions.

And a lot of mutual fund advisors, they want to be able to put all their orders in at one point in time, get the opening auction and the closing auction and be done. And the reality is that's very hard in the electronic markets. And the three exchanges that trade ETFs before the floor started to last year, November 14th, to be exact, they're all electronic markets. NYSE Arca, the largest electronic market for ETFs in the world. And we do a lot to focus on that. But the reality is there more and more investors out there, they want to just be able to trade the closing auction. And the floor allows you to do that seamlessly with a person on the other side of that trade. They can aggregate all the orders and create a liquidity point right up against NAV. The date is there, the proof is in the pudding, if you will.

There's six ETFs now listed on the floor with about, I believe right now we have four planning to move there in the next 30 to 60 days. And we have an exciting time. Nichole, another new first for the New York Stock Exchange, we're expecting early August the very first ETF IPO on the floor instead of just transfer to the floor.

Nichole Kramer:

Oh my gosh.

Douglas Yones:

More to come there. Nichole, we talked a lot about the white paper. I hope people know they would just Google it and type Rise of The ETFs or SS&C ALPS. But what's another way, where should someone go to get a copy of this fantastic read?

Nichole Kramer:

You can go to www.ssctech, that's S-S-C-T-E-C-H.com. And just scroll down and click on resources, the resources page and just type in Rise of The ETFs.

Douglas Yones:

And of course, if you end up finding this podcast, not just through downloads, which please subscribe to the ETF Central The Podcast so that we can keep our numbers up. But more importantly, if you came through a LinkedIn banner or something like that, we'll make sure we link to the white paper in that as well. I'd love to keep you here all day, but I know we're running low on time. Nichole, we talked a lot about asset managers that are thinking about ETFs or they read the paper and they say, "Hey, I want to learn more." How should they be reaching out to you? How do asset managers engage with you, your team, the team at SS&C ALPS?

Nichole Kramer:

If they download the paper from our resources page, it's automatically going to create because fill in their information and that'll create a ticket for our sales team to reach out. But they can also reach out to me directly. Just send me an email, Nichole.Kramer@sscinc.com and we'll get you going and get that conversation going. But just pick up the phone, email, click on the link, talk to Doug, he'll hook you up with me. There's just so many different ways and we can really walk you through how it is that we can be a partner with you. And that's really important for SS&C ALPS is that you are a partner, not just someone we provide service to.

Douglas Yones:

And I said it before, I'll say it again. It is the people at SS&C ALPS, beyond their infrastructure, their fantastic technology. It's the people. Everyone you meet, you want to be best friends with them, you want to be around them, and there's no better way to do business than to do business with friends. I'll leave it there, Nichole. This is a wrap on this edition of ETF Central The Podcast. As a reminder, you can find this episode as well as many other episodes. And by the way, you can spend time utilizing that free ETF screener on the website, etfcentral.com. Just go there, go to the screener bar, type in anything you want to find an ETF for, and you will find that it's intuitive and it's free. Also, take time. Explore ETF University. You'll find Nichole's full interview there.

It is the place for educated investors to increase their knowledge when it comes to investing and when it comes to ETFs. Thank you again, Nichole, for being here to share your insights. Stay tuned for upcoming episodes featuring thought leaders from across the ETF ecosystem. I'm Douglas Yones, today's podcast host, Head of Exchange Traded Funds at the New York Stock Exchange, the Home of ETFs.