Reggie Browne, the global “ETF Godfather,” has expressed his views on Bitcoin spot ETFs, stating that there is a high probability of these ETFs trading at a premium to the spot price due to the complexity of market making operations.
With the launch of Bitcoin spot ETFs seemingly imminent, the price of Bitcoin surged yesterday evening and reached a new high of $47,248 today, the highest in 21 months. Reggie Browne, who is known as the “ETF Godfather,” shared his thoughts on Bitcoin spot ETFs in an interview with Bloomberg.
Reggie Browne, currently the Head of ETF Trading and Sales at Global Trading Systems (GTS), stated that if a Bitcoin spot ETF is approved, there is a high probability that the initial price will trade at a premium to the spot price. The occurrence of this premium is partly due to the current way US institutions trade cryptocurrencies. Since most US brokers cannot directly trade Bitcoin with cash in their brokerage businesses, they will have to hedge through futures trading and trade Bitcoin at a premium before choosing to close their positions, which adds to the complexity of operations.
From the perspective of market makers, Reggie Browne believes that despite the existence of some trading complexities, the market liquidity is strong enough to maintain spreads within a highly competitive and tight range. He further emphasized that market makers are ready to provide ample liquidity for this new trading structure and build resilience around it, alleviating investor concerns about spreads.
James Seyffart, an ETF analyst at Bloomberg, commented on Reggie Browne’s viewpoint, stating that he agrees with the trouble caused by brokers not having direct access to Bitcoin and having to hedge through futures trading, but he believes that an 8% premium seems too high and time will prove everything.
Reggie Browne plays a pivotal role in the ETF industry and is considered a godfather figure. Since the launch of SPDR S&P 500 ETF Trust (SPY) in 1996, he has been providing liquidity for both new and established ETFs. Prior to joining GTS, Browne held senior leadership positions at companies such as Cantor Fitzgerald, Newedge USA, Susquehanna International Group, and O’Connor Associates.
His achievements in the ETF field include serving as a designated market maker for numerous pioneering ETFs and developing multiple international ETF markets. In 2019, he was awarded the Lifetime Achievement Award by ETF.com.
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