Questions About Liquidity Provider - Flow of Operations
Hi,
I got a question about the liquidity provider's operating model. Really hope if someone can take a look and share some thoughts!
Scenario:
- Say an ETF investor wants to offload a million ETF shares; the investor is seeking multiple market makers to offload the shares and compare the bid/ask price quotes; he/she will select the highest bid price so the investor can sell high. Now market makers got these shares and will try to offload;
Question topic 1:
I know they should have already got the same ETF’s underlying assets and some exposure to the same ETF shares. How exactly do they sell at the higher ask price? Why can't the investor do it themselves? What's the most sophisticated part of this process? I really want to understand the complete flow of their operations.
Question topic 2:
I understand that they can make arbitrage profits by buying undervalued assets and overvalued ETFs. But how is this strategy involved in their liquidity service for investors?
Really appreciate if someone can correct my misunderstanding or shed some light on this. Thanks!
leopardl7520, hey, look at the bright side, at least you didn't get a ton of monkey shit thrown at you...here is my best guess on threads that might be helpful:
You're welcome.
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