Morley Conn

whether it's futures, whether it's US markets or other asset classes, they're always looking for additional price points and tools that they can use to hedge their exposure.

So proxies are a really important part.

And what they'll be looking as well to do is look for correlations, historical correlations in these assets.

So they have more tools available to trade various ETFs, particularly if they're less liquid, less active.

And so that's an important part of what we're constantly looking for.

And those can be in all sorts of different markets.

I hear some in the U.S.

market will also trade credit default swap indices, which are broad-based credit indices against their ETF positions to hedge themselves.

It's a constant battle that we're looking to solve.

So that's definitely a important part of trading, especially when it comes to more, less liquid ETFs.

When it's closed, we will widen spreads.

We will definitely have to widen spreads when the risk is at a heightened levels.

And we will still quote, there's been situations very recently I can think about when Europe was closed, but we've had a client wanting to move a large block of ETFs that had a European equity exposure in it.

We will look to, if the US market is open as well, we'll look to US comparable ETF proxies that are also trading EFI underlying ETFs.

So that can be a key tool for us to use.

But pricing will adjust because we are taking on balance sheet risk, Cameron, when we're pricing up large blocks during times when the underlying liquidity of that market is not where it normally is.

Well, one factor that in the wideness of an ETF spread that I did mention before about the redemption and issuance credit redeem process, you have what's called a CAF, a cash adjustment factor.

So when we trade and exchange cash instead of securities, the issuer is going to take that cash and go out into the marketplace and buy those securities.

If it's in some less liquid or foreign market, they are going to charge this capital adjustment factor.

And we embed that.