Inside the ETF primary markets: Structure, scale and the need for smarter workflows

KEY TAKEAWAYS

• ETF growth and product innovation are accelerating, increasing structural complexity across global markets.  

• Bloomberg provides an integrated, global set of ETF trading tools, including primary market mechanisms like creation and redemption, which are critical to liquidity, pricing and scalability.  

• Navigating regional differences and operational workflows is essential for efficient ETF trading at scale. 

As exchange-traded funds (ETFs) become one of the most widely used tools in modern investing, the ETF ecosystem is undergoing significant transformation. 

Rising volumes, increasing complexity of strategies being wrapped inside ETFs and broader adoption are increasing the demands on trading desks. Execution efficiency, risk management and the ability to operate across fragmented global markets are becoming important considerations.

In this environment, understanding ETF market structure, particularly the role of the primary markets, is essential. As liquidity dynamics evolve, driven by expanding investment strategies being formed within the ETF wrapper, the ability to access create and redeem mechanisms is becoming an important component of trading strategies for sell-side firms dealing with ETF secondary market trading.

Bloomberg’s ETF solutions across the primary and secondary markets are designed to support this shift and many others, helping clients standardize workflows, improve execution and navigate a complex global landscape. 

ETFs continue to reshape the investment landscape 

ETFs continue to expand at an elevated pace, driven by sustained inflows, product innovation and increased participation from both institutional and retail investors. The growth of crypto-linked ETFs and other structures is democratizing investing for the public, widening access to asset classes that were previously less accessible. 

At the same time, the market is shifting toward active strategies. As of March 2026, active ETFs in the U.S. surpassed 1.51T in AUM, seeing half a trillion in asset growth from prior year balances.  The influx of assets into the active ETF space has prompted investment management firms across the industry to get involved. In February 2026, 88% of newly launched ETFs were actively managed, reflecting a move away from traditional index-tracking products and toward more differentiated approaches. 

ETF activity is also becoming more geographically diverse. While the U.S. remains the largest market, Europe and Asia continue to grow, with asset managers expanding their footprint and adapting to regional market structures.

Navigating a more complex market

As the ETF universe grows, so does the complexity of trading it. 

Market participants must price a rapidly expanding range of instruments across time zones and asset classes, while specialist expertise remains limited. At the same time, regional differences, including T+1 versus T+2 settlement cycles, local clearing frameworks and custody requirements, directly influence how ETF trades are structured and executed. Not to be outdone, discussions continue on around what 24×5 trading would mean for ETF markets, if implemented, further increasing complexity for market makers and authorized participants to support ETF liquidity.  

With all these considerations for clients, Bloomberg is investing in enabling quicker and cleaner access to ETF data across holdings, secondary market quotes and fair value estimates. The aggregate of ETF holdings data across domiciles allows sell-side desks to access key holdings information with minimal friction and latency to support pricing throughout the trading day.  

As ETFs hold underlying securities, the create and redeem mechanism relies on the delivery of a basket of securities in exchange for ETF shares. This often requires portfolio managers or market makers and authorized participants to source the underlying investments. Tools such as the Bloomberg Portfolio Trading Basket Builder (PTBB) allow users to access securities such as corporate bonds in a single trade, while also assessing how a proposed basket aligns with ETF holdings and referencing iNAV to indicate fair value prior to execution. This connectivity supports pricing and execution decisions when portfolio trading is used. 

ETF market structure varies across regions, and these differences can impact pricing, liquidity access and execution strategy. For global firms, the challenge is twofold: they must identify where workflows can be standardized and where local market structure requires tailored approaches. 

The right data is essential to ensure appropriate trading strategies are applied to each trade and that pricing models are calibrated accurately. A clear understanding of how primary and secondary markets interact supports more consistent execution outcomes. This complexity shapes not only how firms access primary market liquidity, but also how they approach execution in the secondary markets.

Building an effective ETF trading stack 

Automation workflows are becoming more widely adopted and are becoming a baseline requirement for clients. Trading desks are implementing rules-based processes and integrated systems to manage complexity at scale. This includes automated create and redeem workflows, which are increasingly used as firms rely on primary market access to source liquidity, particularly for newer or less liquid ETFs. 

The Bloomberg Terminal is a multi-asset tool spanning fixed income, equities, crypto, derivatives (i.e. options) and more, enabling users across the buy and sell side to manage capital flows alongside a diverse set of dealers and market makers. 

Expanding front office tools into the primary market workflow is an area of focus, bringing capabilities historically used in secondary market trading into create and redeem processes. This includes portfolio optimization and analytics, speed of execution and data output through FIX and Bloomberg protocols such as BPIPE, as well as integration with order management systems for intraday portfolio analysis and execution through Bloomberg EMS solutions. 

Bloomberg provides an integrated, global set of ETF trading tools, giving clients unified access to liquidity and workflows across the Americas, EMEA and Asia Pacific regions through a single-entry point. This approach supports scale, cost efficiency and consistency across regions. 

Enhanced basket functionality 

As trading desks refine their execution strategies, the connection between secondary activity and primary market workflows becomes increasingly important. Access to data tailored specifically to ETF liquidity sourcing, from pre-trade analysis to execution and settlement, requires a streamlined and readily-accessible source of truth for data. Trades executed in the secondary markets can trigger create and redeem activity, particularly when available liquidity is limited.  

BSKT is Bloomberg’s primary market workflow tool designed to facilitate ETF creation and redemption. It enables authorized participants and market makers to negotiate, manage and exchange underlying security baskets for ETF shares in a standardized manner.  

BSKT provides a single workflow that enables market makers, authorized participants and ETF portfolio managers to discuss and agree on the structure of a create or redeem ticket. The workflow connects Bloomberg liquidity data and analytics, including aggregated portfolio exposure metrics such as yield to worst, option-adjusted spread and duration, alongside bond cost estimates using pre-trade transaction cost analysis. Following agreement, tickets can be staged electronically to back-office providers for both buy-side and sell-side workflows. 

The solution also allows ETF portfolio management teams to source underlying liquidity directly within the create and redeem process, supporting trading efficiency. Post-execution, integrated connectivity with back-office providers enables downstream reporting for both issuers and liquidity providers. 

Miguel Alvarez, who oversees BSKT, explains how Bloomberg’s tools support these workflows: 

“Today, traders can access the secondary markets for ETFs directly through Bloomberg’s toolset while also providing sell-side and buy-side participants the ability to tap into the primary markets when needed, creating or retiring ETF shares in response to secondary market activity. 

We provide liquidity providers with the underlying data they need to price ETFs accurately and quote to clients. That same dataset can be published into BSKT, giving firms a channel for managing capital flows into and out of the ETF. Traders can also use Bloomberg to execute any underlying securities they may be short or missing in exchange for ETF shares.” 

As client workflows evolve, there is an increased need for efficient and scalable processes that support in-kind create and redeem activity. Active ETF managers are placing greater emphasis on discretion when sourcing liquidity, requiring control over how and when proposed baskets are shared with market makers. BSKT supports both blind and non-blind distribution of security lists, enabling portfolio managers to manage access to sensitive information, allowing for operational scale and consistency. 

Positioning for the next phase 

The ETF landscape continues to evolve as product innovation, complexity of asset classes and regional market differences shape how trading desks operate. These changes are placing greater emphasis on infrastructure, data and workflows that support consistent access to liquidity and operational scale.  

Investment in accessibility of data remains a key area of focus for Bloomberg. To properly price and provide liquidity for sell-side participants, access to the latest holdings and baskets is central. Bloomberg data enables traders to access broad coverage of the ETF holdings data using real-time electronic protocols.  

Furthermore, services such as BSKT provide permissioned sell-side desks with access to ETF baskets in real-time in order to have the latest information. These services allow fund managers to make updates to their baskets in near real-time and distribute to traders efficiently.  Investments do not just stop at holdings and baskets accessibility.  

ETF portfolio managers, broker/dealers and market makers can now look at an ETF’s iNAV as a reference for a basket of securities when using Bloomberg’s portfolio trading tool , PTBB <GO>. Embedded in that tool, users have access to compare a proposed list against ETFs and see which ones most overlap on a holdings basis to their list. PTBB also leverages Bloomberg’s dataset to provide an intraday view of an ETF’s iNAV, offering a real-time indication of fair value ahead of the ETF’s NAV publication.  

Increasingly, due to the liquidity needs of sell-side desks, primary market workflows are becoming a bigger part of the sell-side and ETF issuers’ toolkit. The ability to manage create and redeem activity in a structured and connected way supports how firms source liquidity, manage exposures and respond to changing market conditions.  

As ETFs continue to push the boundaries of what underlying assets they hold, whether for active or passive management, BSKT remains at the forefront of helping ETF PMs to manage their capital flows with minimized costs. The increasing adoption by active management of ETFs as a vehicle of choice for deploying investment strategies has put increased focus on the primary market (i.e. create/redeem) workflow.  

At Bloomberg, investment in development is focused on bringing more front-office tools into the ETF primary market workflow. Managers are requiring analytics such as portfolio cost analysis through Bloomberg’s TCA capabilities, aggregated portfolio statistics powered by PORT’s risk engine and distribution of the list to a select user list.   

Portfolio managers in the active space increasingly want greater control over distribution of their preferred names list. This has required new features that put guardrails in place to ensure counterparties receive insights only upon agreement and verification by the portfolio manager that the market maker requesting the basket list is approved for access. Bloomberg provides the tools, data and connectivity to support these workflows, helping market participants navigate market structure and operate across regions with consistency. 

While primary market workflows are a critical component of ETF trading, much of the day-to-day execution activity takes place in the secondary markets.  

In our next piece, we explore how trading desks are approaching secondary market execution, including RFQ workflows, dealer selection and tools designed to support pricing and liquidity access.