IndexIQ
®
ETF Liquidity and Trading
Smart solutions for better portfolios
2015
FOR REGISTERED REPRESENTATIVE USE ONLY. NOT FOR PUBLIC DISTRIBUTION. 1641559 ME31b-10/15
IndexIQ: Current Investment Solutions
Absolute Return
Real Assets
Global/International
Hedge Strategies
Commodities/Natural Resources
Currency Hedged Equity
IQ Hedge Multi-Strategy Tracker ETF
Ticker: QAI
Multi-Strategy - Core Hedge Alternative
IQ Global Resources ETF
Ticker: GRES
Core Commodity Exposure
IQ 50 Percent Hedged FTSE International ETF
Ticker: HFXI
Currency Hedge – International Developed Markets
IQ Hedge Market Neutral Tracker ETF
Ticker: QMN
Fixed Income Hedge Alternative
IQ Global Agribusiness Small Cap ETF
Ticker: CROP
Farming & Agriculture
IQ 50 Percent Hedged FTSE Europe ETF
Ticker: HFXE
Currency Hedge – Europe
IQ Hedge Macro Tracker ETF
Ticker: MCRO
Equity Hedge Alternative
IQ Global Oil Small Cap ETF
Ticker: IOIL
Pure Oil
IQ 50 Percent Hedged FTSE Japan ETF
Ticker: HFXJ
Currency Hedge – Japan
IQ Hedge Long/Short Tracker ETF
Ticker: QLS
Long/Short Exposure
IQ Canada Small Cap ETF
Ticker: CNDA
IQ Hedge Event-Driven Tracker ETF
Ticker: QED
Event-Driven Exposure
IQ Australia Small Cap ETF
Ticker: KROO
IQ Merger Arbitrage ETF
Ticker: MNA
Global Mergers & Acquisitions
IQ Hedge Multi-Strategy Plus Fund
Ticker: IQHIX/IQHOX
Multi-Strategy – Core Hedge Alternative
Real Estate
IQ US Real Estate Small Cap ETF
Ticker: ROOF
REITs
Multi-Asset
IQ Leaders GTAA Tracker ETF
Ticker: QGTA
Core Global Allocation
Alternative ETF Models
IQ Global Alternatives ETF Model
Turn-Key Comprehensive Liquid Alternatives
IQ Hedge Multi-Strategy ETF Model
Multi-Strategy - Core Hedge Alternative
Inflation Hedge
IQ Real Return ETF
Ticker: CPI
Short Term/TIPS Bond Alternative
Each IndexIQ solution is a first of its kind,
providing previously unavailable exposure.
MainStay Investments® is a registered service mark and name under which New York Life Investment Management LLC does business. MainStay Investments, an indirect subsidiary of New York Life Insurance
Company, New York, NY 10010, provides investment advisory products and services. IndexIQ ® is an indirect wholly owned subsidiary of New York Life Investment Management Holdings LLC. ALPS Distributors, Inc.
(ALPS) is the principal underwriter of the ETFs. NYLIFE Distributors LLC is a distributor of the ETFs and the principal underwriter of the mutual fund. NYLIFE Distributors LLC is located at 169 Lackawanna Avenue,
Parsippany, NJ 07054. ALPS Distributors, Inc. is not affiliated with NYLIFE Distributors LLC. NYLIFE Distributors LLC is a Member FINRA/SIPC.
FOR REGISTERED REPRESENTATIVE USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
2
Ideal Time to Trade
Eastern Time
 U.S. Equities
 Treasuries
 Oil & Metals
 Asia
2:00 p.m. – 4:00 p.m.
 U.S. Equities
11:35 a.m. – 2:00 p.m.
 Asia
 Treasuries
 High Yield
 Commodities
 Emerging Markets
FOR REGISTERED REPRESENTATIVE USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
7:30 a.m. – 9:30 a.m.
9:35 a.m. – 11:30 a.m.
 Asia
 Europe
 Emerging Markets
 Oil & Metals
 U.S. Equities
 Europe
 Asia
 Treasuries
 High Yield
 Commodities
 Emerging Markets
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Common Myths, Best Practices,
and Better Execution
Observation
Volume
Myth
1. Average daily volume looks very
light, so the ETF must be illiquid
and difficult to trade.
Best Practice
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
Price
Size
2. The last traded price for the ETF
is close to the price that I should
expect to pay or receive for my
trade.

3. Last price is a good
representation of the true value
of the ETF.

4. I need a full creation block to get
an AP to create and offer a lower
trading cost.








Side
5. I should be able to access
liquidity for my buy order, but
will not be able to access the
same liquidity for my sell orders.
FOR REGISTERED REPRESENTATIVE USE ONLY. NOT FOR PUBLIC DISTRIBUTION.

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ETF liquidity is driven off the liquidity of the underlying securities, not ETF
printed volume.
ETFs can issue new shares and, therefore, offer additional liquidity as
frequently as necessary.
“Authorized Participants” use the creation/redemption process to facilitate
trading and satisfy market demand.
Last traded price is, simply, the last traded price.
Each trade is independent and has its own unique characteristics that should
not affect any trade that follows.
These characteristics include time of trade, market levels, trade
instructions, etc.
The last price will not give you the best indication of the fair value of an ETF.
Investors should reference the ETF IIV (ticker.IV).
If the trade is relatively small, the quote depth offered by the specialist
volume visible on the screen should be wide enough to handle orders of 10K
and below.
Trades should be executed as limit orders (not market orders), and investors
should avoid exceeding the quote depth and trading at the open or close.
Large orders do not have to be full creation/redemption block size.
Market makers/APs will facilitate trades of 10K and above.
The current position of their book will determine whether they create
or redeem.
APs and market makers have no preference for buys or sells.
These counterparties profit on the spread and will hedge either side of
the position.
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ETF Hidden Liquidity
Just the Tip of the Iceberg
Last Price: 25.90
Intraday Indicative Value: 25.91
CPI
BID1
ASK1
Price
25.86
25.95
Size
12K
500
Advertised Best Bid & Offer
Direct Market Maker/Authorized Participant
Quote
Hypothetical Bank Quotes2
(Reach out to two or more brokers and ask for a principal quote)
H
I
D
D
E
N
10K
25.89
25.92
75K
25.89
25.92
100K
25.88
25.92
300K
25.87
25.93
1M
25.87
25.94
Dark Pool
(Additional Hidden Liquidity)
1. Actual Bloomberg Market Depth Quotes.
2. Hypothetical quotes are for illustrative purposes; actual quotes are subject to change.
FOR REGISTERED REPRESENTATIVE USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
5
ETF Trading Process
ETF Liquidity is Based on Liquidity of Portfolio Components
Firm Size/Type
Large
(e.g., Institutional
Wirehouse Financial
Advisor)
Medium
(e.g., Larger RIA)
Small
(e.g., Small-Mid RIA)
Trading Characteristics
ETF Trade Size
 Typically trade using sell-side
institutional desk
 Have complete access to all
sources of liquidity
 No trade limitations
Large
(e.g., >25K
Shares)
 Typically trade through
Custodian (e.g., Schwab,
Fidelity)
 May have option trade away
 May have trading systems
 Will likely need to pro-rata
allocated shares to numerous
accounts
 Typically trade through
Custodian (e.g., Schwab,
Fidelity)
 Unable to trade away
 No trading systems
 Limited staff
 Pro-rata allocations may be
necessary
Medium
(e.g., 10K-25K
Shares)
Small
(e.g., <10K
Shares)
Execution Strategy
 Contact third-party Institutional Program,
Block, and/or ETF desks
 Can also contact market maker/authorized
participant (AP)1 directly (need not be full
creation unit size)
 May also want to shop around amongst
multiple market makers for best quote
 Strategy is to target the NAV
 Work with broker-dealer (B-D) arm of Custodian to
access market maker liquidity
 Provide B-D with list of market participants/APs
 Certain third-party trading firms can also do stepout trades2 if advisor can’t trade away
 Strategy is to target the NAV
 Work the block through 2-3 limit orders within
quote depth (approx. 5K shares)
 Price order(s) within bid/ask, but note ETF IIV
(ticker IV)3
 Update limit price as market moves
 Avoid exceeding quote depth to minimize any
market impact
 Avoid trading at open; wait for entire basket to
start trading
1. Authorized Participants are typically large sell-side institutions, primarily market makers or specialists, responsible for the creation and redemption of ETF shares.
2. Step-out trades allow the client to access market maker liquidity through a third-party trading firm without trading away from the custodian.
3. An Intraday Indicative Value (IIV) is published by the NYSE for each ETF as a proxy for intraday NAV.
FOR REGISTERED REPRESENTATIVE USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
6
Select Authorized Participants
& Trading Relationships
IndexIQ ETFs – Authorized Participants
 Barclays Inc.
 Knight Clearing Services LLC
 BNP Paribas Securities Corp.
 Merrill Lynch, Pierce, Fenner & Smith
 BNY ConvergEx Execution Solutions
 Merrill Lynch Professional Clearing Corporation
 Cantor Fitzgerald & Co.
 Morgan Stanley
 Citigroup Global Markets
 National Financial Services
 Credit Suisse Securities
 Nomura Securities International
 Deutsche Bank Securities
 RBC Capital Markets, LLC
 Goldman Sachs & Co.
 Timber Hill LLC
 Goldman Sachs Execution & Clearing, L.P.
 UBS Securities LLC
 J.P. Morgan Securities
FOR REGISTERED REPRESENTATIVE USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
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For more information, visit our web site at
IQetfs.com
or call 888-934-0777
Consider the Funds’ investment objectives, risks, and charges and expenses carefully before investing. The prospectus and the statement of additional information
include this and other relevant information about the Funds and are available by visiting IQetfs.com or calling 888-934-0777. Read the prospectus carefully before
investing.
MainStay Investments® is a registered service mark and name under which New York Life Investment Management LLC does business. MainStay Investments, an indirect subsidiary of New York Life Insurance Company,
New York, NY 10010, provides investment advisory products and services. IndexIQ ® is an indirect wholly owned subsidiary of New York Life Investment Management Holdings LLC. ALPS Distributors, Inc. (ALPS) is the
principal underwriter of the ETFs. NYLIFE Distributors LLC is a distributor of the ETFs and the principal underwriter of the mutual fund. NYLIFE Distributors LLC is located at 169 Lackawanna Avenue, Parsippany, NJ 07054.
ALPS Distributors, Inc. is not affiliated with NYLIFE Distributors LLC. NYLIFE Distributors LLC is a Member FINRA/SIPC.
FOR REGISTERED REPRESENTATIVE USE ONLY. NOT FOR PUBLIC DISTRIBUTION.
8