Almost Entire $8 Trillion ETF Market Hinges on a Few Key Firms

In the past five years US ETF market assets have more than doubled, over 1,000 new funds launched, and annual trading volumes jumped by around $11 trillion. Yet there has been one exception to the explosive growth: The ranks of firms responsible for steering cash in and out of every product.

This cohort — known as authorized participants, or APs — are a type of broker-dealer indispensable to the smooth functioning of every exchange-traded fund in North America. But as the industry has swollen, their numbers have barely changed. In fact, the most active APs have been increasing their market ...