BATS Global Markets has been aggressively taking on well-established NYSE and Nasdaq exchanges in the battle for ETF listings.
The latest move by the Kansas City, Missouri-based exchange was the introduction of an incentive program that pays ETF issuers to list funds on BATS. That payment, which is based on consolidated average daily volume exceeding 1 million shares a day, ranges from $3,000 to $400,000 a year per ETF. And the incentive grows as volume grows.
To put that incentive in perspective, consider that, typically, ETF issuers pay between $5,000 and $55,000 to have their funds listed on an exchange, according to the Wall Street Journal. BATS not only offers free listings, it now pays for volume.
ETF Launches Jump
The idea seems to be working. Since the inception of the program on Oct. 1, known as the BATS ETF Marketplace, the number of ETF launches have jumped at the exchange. According to our data, in the past two months, about 25% of new launches took place on BATS—that’s 11 new listings in about eight weeks, and one in every four new ETFs coming to market.
By comparison, the exchange had welcomed only seven new ETFs in the nine months prior between Jan. 1 and Sept. 30 when more than 200 new funds had been listed. In 2014, when total ETF launches totaled 202 new funds, BATS saw only five new listing that year.
At the time of the program’s inception, Laura Morrison, senior vice president, global head of exchange traded products at BATS, said the idea was to allow issuers to benefit from their listings.
Issuers Shares In Trading Revenue
“At BATS, we believe it is important for an exchange to align its interests with the interests of its issuers and their investors. Our Issuer Incentive program accomplishes that by allowing issuers to share in the revenues from the trading of their products,” Morrison said in a press release. “Our Issuer Incentive program creates an opportunity for ETP issuers to offset expenses with revenue from activity in their products while trading on one of the most liquid markets for ETPs.”
iShares, the largest ETF issuer in the country, with more than $830 billion in assets under management, has been leading the number of listings on BATS. This year, the firm has brought nine new ETFs to the exchange, including a lineup of currency-hedged funds it introduced in November.
Other issuers listing on BATS this year include WisdomTree, KraneShares and Pacer. So far this year, the U.S. ETF market has welcomed some 270 new strategies.