Cantor Fitzgerald is launching an ETF arbitrage business in New York. The global investment bank announced today that it had named Dan Segal, formerly of SEG Capital, as Managing Director of its ETF Arbitrage Group, reporting to Jarred Kessler, Global Head of Equities.
Cantor said it's goal with this new group is to "build and establish a global presence in the ETF marketplace." Joining Segal, Cantor also appointed Joseph La Grasta, Todd Alberico, and Kanellas Cafcules as ETF Trader/Market Makers.
Cantor CEO Shawn Matthews said Segal has a "stellar record of outstanding market-making capabilities which will help to drive the growth and success of Cantor's ETF platform."
Before SEG Capital, Segal was an ETF market maker on the floor of the American Stock Exchange where he focused on trading broad based domestic ETFs and served as an ETF specialist for Goldman Sachs.
ETF arbitrage has been a growing business, accounting for an average 6.7 per cent annual profit per year, according to a 2010 study by researchers from Massey University and The University of Auckland. They reportedly arrived at that figure after investigating the arbitrage opportunities that appeared between two of the most liquid equity ETFs in the world: the SPDR (SPY) and the iShares S&P 500 ETF (IVV). They add that profits from trading more illiquid names can be much higher.