ICE ETF Hub Announces Support of US-Listed Fixed Income ETFs

Ricardo Esteves

Ricardo Esteves has seen business and economics through many lenses. He joined the Financial Services Industry in 2009, and has been a financial journalist since 2011. He holds a degree in Business Administration and has experience producing real-time news, from both buy-side and sell-side, as well as for retail traders, brokers and service providers. Esteves' work has appeared in a variety of online publications including FX Street and FinanceFeeds.

ICE ETF Hub

ICE ETF Hub Announces Support of US-Listed Fixed Income ETFs

December 5, 2019

ICE ETF HubIntercontinental Exchange has added new functionality to ICE ETF Hub to support US-listed fixed income exchange-traded funds (ETFs), which enables authorized participants to submit creation/redemption orders for fixed income ETFs – including those containing domestic and international government bonds, corporate bonds, mortgages and municipal bonds.

Ben Jackson, President of Intercontinental Exchange, commented: “This functionality expands ICE ETF Hub’s capabilities to include fixed-income ETFs, an area of the market that is expected to double in assets under management over the next five years. This feature also represents a key part of our effort to launch custom basket functionality for the creation/redemption process, helping to open the door to significantly more participation and innovation in the ETF industry.”

ICE ETF Hub is an industry-wide, open architecture, a primary market platform for ETFs with the objective of creating a more standardized and simplified process for ETF creation and redemption. ICE ETF Hub aims to provide a standardized, automated process for assembling and placing creation and redemption baskets, a feature that offers critical efficiency gains for all market participants.

As a result of a recently passed SEC rule, ETFs relying on the rule are permitted to use custom baskets if the ETF adopts written policies and procedures governing the custom process. ICE ETF Hub will provide infrastructure to support the use of custom baskets in the creation/redemption process.

ICE launched ICE ETF Hub in October with support for order taking for US-listed Domestic Equity ETFs. Additional functionality, including support for the assembly of custom baskets and US-listed International Equity ETFs, is planned for 2020.

ICE ETF Hub also plans to establish connectivity next year to ICE Bonds’ trading protocols, including click-to-trade, portfolio auctions and request-for-quote (RFQ) and to other trading venues. ICE ETF Hub is available to all market
participants on an open basis, offering flexible access to third-party order management systems, trading venues, proprietary software solutions, and connectivity firms. 

Working closely with the ETF community of issuers, authorized
participants, market makers, and custodians, ICE ETF Hub was created to
support further growth in the ETF market. The new ecosystem leverages
the many strengths of ICE across connectivity, data, execution, and
analytics to establish a robust platform for ETF primary trading. By
creating new standards and protocols for the primary market, ICE ETF
Hub is designed to reduce inefficiencies in the ETF create/redeem
workflow – and lead to increased participation across the marketplace.

The Global ETF market has experienced tremendous growth over the last
decade, with assets under management (AUM) of over $5.7 trillion as of
September 30, 2019. Even still, ETFs are only a fraction of the market
– in the U.S., ETFs represent 9% of the U.S. equity market and less
than 2% of the U.S. bond market, according to recent research from
BlackRock – indicating there is still significant room for growth.

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