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The securities industry has been experiencing an unprecedented shift towards investing in passive

investments, and since the launch of the first U.S. listed Exchange Traded Funds (ETFs) in 1993, this trend has

only accelerated. Convergex’s asset owner clients increasingly invest in ETFs for a variety of reasons including;

as a part of an overall investment strategy, for their lower cost structures, and for short-term liquidity

management and hedging purposes.

Below is a quick overview of the current U.S. ETF marketplace:

• There are currently over 1,900 ETFs available for trading in the U.S., with approximately 94 Fund Sponsors

and 125 Index Providers listed on U.S. exchanges;

• U.S. listed ETF assets are approximately $2.4 trillion;

• ETF assets grew at an annualized rate of 24% for the 10 year period ending in 2015, versus 8.2% for

Mutual Fund assets when compared to the same time period.

One of the common misconceptions about investing in ETFs is that all ETFs are very liquid. The reality is much

different. The vast majority of U.S. listed ETFs trade less than 3 million shares per day, thus sourcing liquidity

and achieving best execution can be challenging.

Convergex offers a comprehensive suite of ETF solutions to our clients including;

• A dedicated trade execution desk that specializes in finding liquidity in thinly traded ETFs,

• Analytics and a suite of proprietary ETF execution tools;

• Acting as an Authorized Participant for major ETF fund families which serves as a premier source of ETF

liquidity through the creation and redemption process.

Furthermore, earlier this year, Convergex launched its award winning ETF Direct trading platform which

streamlines the process for accessing and transacting on ETF quotes from multiple liquidity providers. ETF

Direct was designed to shed light on what is considered a still opaque market. Furthermore, providing an audit

“ETF Insights: The Continued Explosive Growth of Investments in ETFs & How Convergex Can Help You Source Liquidity & Achieve Best Execution”

By Tim Conway, Managing Director Head of Plan Sponsor Services

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trail on the multiple quotes received and transacting on the best price compliments our clients mandate for

best execution.

Convergex’s asset owner clients are very focused on improving overall portfolio returns, while remaining

dedicated to reducing overall plan costs and expenses. In speaking with many of our asset owner clients and

their consultants, we know that, historically, many of our clients have worked directly with their custodians

when transacting in ETFs.

When considering your execution options for future investments in ETFs, please do not hesitate to contact

your Convergex Plan Sponsor Sales Representative at 800.992.7526 or Tim Conway at tconway@convergex.

com. With the assistance of our ETF execution specialists, we would be happy to help you craft an optimal ETF

execution strategy while also structuring a very competitive ETF pricing proposal.

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IMPORTANT INFORMATION

Convergex is an agency-focused global brokerage and trading related services provider. In the U.S., Convergex offers products and services through

Convergex Execution Solutions LLC (member NYSE/FINRA/NFA/SIPC), of which Convergex Prime Services is a division; Westminster Research Associates LLC

(member FINRA/SIPC); and Convergex Solutions LLC, of which Connex, Jaywalk and LDB are divisions. In London, Convergex operates through Convergex

Limited, which is incorporated in England and Wales (registered with company number 06262150). Convergex Limited is authorized and regulated by the

Financial Conduct Authority (FCA) of the United Kingdom. Westminster Research Associates LLC is regulated in the United States by the U.S. Securities and

Exchange Commission. Westminster provides services in Australia pursuant to an exemption from the requirement to hold an Australian financial services

license under the Corporations Act 2001 (ASIC Class Order [CO 03/1100])..

Convergex provides brokerage services primarily on an agency basis, but may operate in a riskless principal and/or net trading capacity, and in connection

with certain ETF or ADR transactions, may act as principal or engage in hedging strategies. Convergex does not engage in market making or investment

banking activities.

The material, data and information (collectively “Convergex Information”) that is available from Convergex is intended for institutional investor use only;

is for informational purposes only; is subject to change at any time; is not intended to provide tax, legal or investment advice; and does not constitute a

solicitation or offer to purchase or sell securities. Convergex Information is believed to be reliable, but Convergex does not warrant its completeness or

accuracy and Convergex assumes no duty to update such information. Clients should read their account agreement(s) and documentation with Convergex

carefully as those documents contain important information and disclosures about the products or services covered thereby. Convergex is not responsible

for third-party information or services, including market data from the exchanges. (Rev 3/28/16)

© 2016 Convergex Group, LLC. All Rights Reserved.