Many ETFs languish thanks to restrictive regulation
Rules now bar traders from getting paid by public companies for buying and selling their stocks
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New York
VIRTU Financial Inc's billion-dollar purchase of KCG Holdings Inc this year more than doubled the size of its business that smooths trading of exchange-traded funds.
Now, armed with extra clout, the New York-based high-speed market maker has a 20-year-old US rule in its sights. If the Financial Industry Regulatory Authority revises its Rule 5250, Virtu contends, it can help solve a pervasive problem in the industry by breathing life into small ETFs. About 24 per cent of US funds saw less than US$100,000 traded each day on average in the past year, according to data compiled by Bloomberg.
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