Tier1 Alpha

1/ Ever wonder why there’s been such an explosion in options-based ETFs over the last few years? Look no further than SEC Rule 18f-4. 

2/ This rule essentially made it easier for mutual funds and ETFs to leverage derivatives strategies by replacing outdated coverage requirements with a modernized risk-management framework.
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https://www.sec.gov/resources-small-businesses/small-business-compliance-guides/use-derivatives-registered-investment-companies-business-development-companies-small-entity

3/ Since then, options-based ETFs have grown to well over $100 billion in AUM, covering a broad spectrum of strategies including systematic call overwriting/ cash-secured puts for income generation, defined outcome funds, and leveraged products.

4/ In most cases, market structure is defined by regulation. 

From QDIA rules guiding retirement flows, to Dodd-Frank and the Volcker Rule reshaping risk-taking and market-making, and even modest changes like SEC 18f-4, regulations are the key to understanding structural flows.