The leading operator of global exchanges and clearing houses and providers of data and listings services has launched a new platform that is designed to enable the next phase of growth in the ETF market.
ICE ETF Hub brings efficiencies and standardization to the ETF primary trading market, where shares of ETFs are created and redeemed, with its open-architecture platform. The service was created to support further growth in the ETF market by leveraging the many strengths of ICE across connectivity, data, execution, and analytics to establish a robust platform for ETF primary trading. The ecosystem creates new standards and protocols for the primary market in order to reduce inefficiencies in the ETF create/redeem workflow – and lead to increased participation across the marketplace.
The hub works closely with the ETF community of issuers, authorized participants, market makers, and custodians, in its quest to support the continued growth experienced over the last decade, with assets under management (AUM) of over $5.7 trillion as of September 30, 2019. ETFs, however, are still 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.
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.
Ben Jackson, President of Intercontinental Exchange, said: “Even with the increase in assets and trading volumes over the last ten years, faster growth has been inhibited due to the lack of
standardization in the primary market. With ETF Hub, we are building a new ecosystem that will provide key infrastructure to boost efficiency and standardization across the ETF marketplace. Applying innovative technology solutions that improve market efficiency has long been our hallmark and we look forward to working with our partners to bring this platform forward.”
Samara Cohen, Co-Head of iShares Markets and Investments at BlackRock, added: “BlackRock has long been an advocate for establishing standard and accessible processes for the ETF ecosystem. As the growth of the ETF industry accelerates, it is essential for the infrastructure powering the market to scale rapidly. The ETF Hub brings new efficiencies to the market and creates an open environment where participants can interact effectively to offer greater choice for our clients.”
Christopher Berthe, J.P. Morgan Co-Head of Cash Trading, commented: “With ETFs being an important aspect of our franchise strategy, we are always looking for ways to introduce efficiency into our operating model. ETF Hub helps position us to achieve this through their standardized workflows and increased efficiency.”
Peter O’Malley, head of US ETF Distribution for BofA Securities, Inc, stated: “As one of the largest ETF Authorized Participants, we appreciate ETF Hub’s value proposition. The ETF market continues to grow and is increasingly complex, making the operational efficiencies and standardization ICE ETF Hub provides benefits for participants and our clients.”
Offering a standardized, automated process for assembling and placing creation and redemption baskets, ICE ETF Hub plans to include ICE Data Services’ pricing, reference data, and analytics, as well as connections to ICE BondPoint and TMC Bonds, which provide fixed income execution protocols for asset classes including Municipals, Corporates, Treasuries, Agencies, and Certificates of Deposit.
