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BATS Could Pay Issuers to List ETFs on its Exchange


BATS Global Markets is looking to become an even bigger player in the exchange traded funds listings arena in a unique: By offering to pay ETF issuer to list with the Kansas-based exchange operator.

BATS entered the ETF listing business in January 2012 with the launch of the iShares MSCI Norway Capped ETF (ENOR) . ENOR’s BATS debut was followed by several other single-country offerings from iShares, including the iShares MSCI Denmark Capped ETF (EDEN), iShares MSCI Canada Small Cap Index Fund (EWCS) and the iShares MSCI Finland Capped ETF (EFNL). [BATS Lures ETF Issuers]

Today, ETFs from iShares, a unit of BlackRock and the world’s largest ETF issuer, account for 21 of the 31 BATS-listed ETFs.

However, BATS has attracted some listings from other well-known ETF providers in addition to being the listing venue of choice for providers behind several new ETFs. For example, ProShares lists seven ETFs on BATS, including the ProShares Investment Grade-Interest Rate Hedged ETF (IGHG) and the ProShares High Yield Interest Rate Hedged ETF (HYHG).

This week, BATS said it“plans to launch what it calls the BATS ETF Marketplace, which will pay ETF providers as much as $400,000 a year to list on BATS. Payments will vary depending on average daily volume,” report Bradley Hope and Leslie Joseph for the Wall Street Journal.

As part of its ETF expansion efforts, in April, BATS appointed Laura Morrison as Senior Vice President, Global Head of Exchange-Traded Products. Morrison previously acted as NYSE’s Senior Vice President of Global Index and ETPs and has accumulated 20 years of experience at the NYSE.

BATS is currently the top U.S. exchange for ETF trading volume, which has become a selling point for new issuers. Additionally, the exchange has adopted a favorable ETF market-making program, which provides incentives to market makers that put up their own capital to aid in tighter bid-ask spreads to promote liquidity and more efficient ETF trades. [BlackRock iShares Raising Liquidity in Smaller ETF Offerings]

“Just a fraction of the more than 1,300 ETFs in the U.S. are listed on BATS, but the exchange operator handles about 45% of trading of ETFs on exchanges and about 27% of overall trading of ETFs on exchanges and private venues, it said,” according to the Journal.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.