The Ontario Securities Commission (OSC) published a detailed study on how Exchange-Traded Funds (ETFs) in Canada have been trading in practice, focusing on secondary-market liquidity and whether arbitrage keeps ETF prices aligned with net asset value (NAV). The study was framed against rapid market expansion to more than 1,200 Canadian ETFs with more than CAD 500 billion in assets by end-2024, alongside increased retail participation and trading activity over the past five years. It examines ETF secondary market liquidity, the effectiveness of the arbitrage mechanism in ensuring market prices reflect NAV, and potential drivers of both liquidity and arbitrage. The OSC noted that the study’s findings informed the Canadian Securities Administrators consultation on Enhancing Exchange-Traded Fund Regulation, which was published concurrently with the report.
Ontario Securities Commission 2025-06-19
Ontario Securities Commission publishes study on Canadian ETF liquidity and arbitrage mechanism
The Ontario Securities Commission published a study on the trading practices of Exchange-Traded Funds (ETFs) in Canada, focusing on secondary-market liquidity and the effectiveness of arbitrage in aligning ETF prices with net asset value. The study, set against the backdrop of rapid market expansion and increased retail participation, informed the Canadian Securities Administrators' concurrent consultation on enhancing ETF regulation.