MFS Active ETFs: Liquidity and Cost-Effective Trading

Judy Shaw: Joining me today is Jamie Harrison. He's the head of Capital Markets at MFS®, and I'm also joined by Pete Giacchi. He is the head of DMM floor trading at Citadel Securities. Wonderful to have you both. Jamie, exciting day here today on the floor of the New York Stock Exchange. You just rang the opening bell celebrating 100 years of your first mutual fund, but also the launch of five active ETFs.

Jamie Harrison: Yeah, that's right. We're super excited to be here today to launch these ETFs on the floor of the New York Stock Exchange. Obviously, a storied institution here with a great history. We think that aligns really well with our history at MFS and we're excited to be here.

Judy Shaw: Now, tell me. What factors contributed to MFS choosing the NYSE floor for its listing venue?

Jamie Harrison: So at MFS, tradability is a primary focus for us and a key part of our value proposition. We want to maximize value for our clients, and that means making sure that we have deep liquidity pools and ample liquidity and volume available to clients when they trade. And Peter Giacchi and his team here at Citadel, in combination with the floor of the New York Stock Exchange, really helps us achieve that goal.

Judy Shaw: Talk more about the benefits to your clients.

Jamie Harrison: So really just a seamless trading experience, right. That's what's really the most important thing for us. We want clients to be able to execute seamlessly at a price that's close to the fund's underlying asset value. And we want there to be, as I said, ample liquidity there both on the bid and the offer.

Judy Shaw: And how do you work with Citadel in bringing these products to market?

Jamie Harrison: So we're in constant communication with Peter and his team here at Citadel as well, in unison with his team upstairs, and they're upstairs trading desk and we're keeping them posted on everything about the fund's makeup, the composition, the rebound strategy, and areas of that nature. And Peter's keeping us close on market moving events, market moving trades and things of that nature as well. So we're talking to them, we stay close to them on a daily basis.

Judy Shaw: And Peter, how does Citadel approach ETF market making on the floor?

Pete Giacchi: Yeah, so first we look, really, we're very excited about partnering with MFS on the five ETFs that are launched on NYSE Classic. At Citadel Securities, we take a thoughtful approach about this and it's actually a combination of a floor trader and our systematic desk upstairs and we're able to take our large balance sheet and provide liquidity in the ETFs to make a tighter spread with more meaningful liquidity for investors to get in and out of the ETF.

Judy Shaw: And how does Citadel improve the liquidity of ETFs through its floor presence?

Pete Giacchi: Yeah, if you really think about the ETF platform on a whole, the advantage of coming to the NYSE Classic is really centered around a couple of things. The first thing is the auctions. The opening auction and the closing auction are handled by a physical trader on the floor of the exchange. So it really enables Jamie and his team to have the security that those ETFs are going to open as close to NAV as possible with us using our liquidity. The second piece is to provide a tight spread where investors have the best opportunity to buy the ETF and the best opportunity to sell the ETF. Our ability to leverage our balance sheet with the combination of a manual trader on the floor and added liquidity from our systematic desk upstairs provide deep markets in the ETF platform.

Judy Shaw: Congratulations to you both on today's launch.

Jamie Harrison: Thanks guys.

Pete Giacchi: Thank you.

Before investing, consider the fund's investment objectives, risks, charges, and expenses. For a prospectus or summary prospectus containing this and other information, contact your investment professional or view online at mfs.com. Please read it carefully.

Exchange-Traded Funds (ETFs) trade like stocks, are subject to investment risk, and will fluctuate in market value. Shares of ETFs are bought and sold at market price, not NAV, and are not individually redeemed from the fund. The market price at the time of sale may be higher or lower than the fund’s NAV, and any applicable brokerage commissions will reduce returns. There can be no guarantee that an active market for the funds will develop or be maintained. Actively managed ETFs differ from traditional ETFs in that they do not seek to replicate or to track a specific index. As such, the ability of an actively managed ETF to achieve its objective will depend on the effectiveness of the fund’s portfolio manager.

The fund may not achieve its objective and/or you could lose money on your investment in the fund. 

These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any MFS investment product.

Neither MFS nor any of its subsidiaries is affiliated with Citadel Securities. The views and opinions expressed are their own.

MFS® Fund Distributors, Inc. Member SIPC, 111 Huntington Avenue, Boston, MA 02199

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