|
|
| ETF market making | Arbitrage between the ETF and underlying securities | Positive: Provides liquidity | Positive: Provides liquidity | Positive: Provides liquidity | Positive: Provides liquidity |
| Statistical arbitrage | Using correlations to determine trade behavior | Neutral | Neutral | Neutral | Neutral |
| News feed arbitrage | Using low-latency news feeds to position trades | Neutral | Neutral | Neutral | Neutral |
| Rebate arbitrage | Layering passive orders to collect rebates from venues | Mostly negative: Could intensify flash crashes | Negative: Increases venue costs | Neutral: Reduces spreads and time to fill | Negative: Increases venue costs |
| Momentum detection | Using strategies to identify spread breaches to position trades | Negative: Increases market impact | Unknown: No effect if clients are unaware | Neutral: Orders are too small | Neutral: Orders are too small |
| Order flow detection | Identifying block orders using electronic means | Negative: Increases market impact | Unknown: No effect if clients are unaware | Neutral: Orders are too small | Neutral: Orders are too small |
| Order flow prediction | Predicting block trades and profiting from them | Negative: Increases market impact | Unknown: No effect if clients are unaware | Neutral: Orders are too small | Neutral: Orders are too small |
| Latency arbitrage | Identifying Smart Order Routers processes to position trades | Negative: Increases market impact | Unknown: No effect if clients are unaware | Neutral: Orders are too small | Neutral: Orders are too small |
| Source: Oliver Wyman |