After an especially active summer for the New York Stock Exchange and ETF industry, my team couldn't be more excited about growth opportunities through the final months of 2019. Just this past quarter, the U.S. ETF market reached a milestone by crossing $4 trillion in assets under management. Having crossed $3 trillion just two years ago, this rapid growth is indicative of the continued innovation, investor demand and issuer success in the ETF industry.
Heading into year-end, our team here at the NYSE continues to focus on new growth opportunities for the ETF markets. First, the Precidian ActiveShares® model approval has opened the door for non-transparent ETF solutions to come to market, including NYSE Arca’s own non-transparent proposal currently filed jointly with Natixis Investment Managers. As the Home of ETFs, the NYSE is best equipped to help your product teams review the numerous models, and support you in the process of bringing them to market. We look forward to working together to launch this new chapter for ETFs.
Second, we are very encouraged by the SEC’s passage of ETF Rule 6c-11, which streamlines the market-entry process for new ETF issuers and products. Between the long term impact of this new ruleset and the potential debut of active, non-transparent ETFs, the industry remains poised for accelerated expansion.
For more insight on these updates and other changes expected to impact the industry, I’m pleased to share our ETF market report for Q3 2019. We hope to see many of you later this month in person at our ETF Summit on October 22. In the meantime, please reach out to the NYSE ETF team or me at [email protected] with anything we can do to help grow your business.
Douglas M. Yones, ChFC®
Head of Exchange Traded Products
New York Stock Exchange
NYSE ETF Summit
We look forward to hosting the next ETF Educational Summit later this month - a half-day of panels on various proposed models in support of the active, non-transparent ETF industry. Following the long-awaited, official SEC approval of the Precidian ActiveShares® solution, we’re gathering industry stakeholders to discuss the opportunity this unlocks for ETF issuers and shareholders.
An Update to Our Active, Non-transparent Solution
The NYSE remains committed to an SEC approval on our jointly-filed active, non-transparent solution. Filed alongside Natixis Investment Managers, the NYSE model will use a proxy portfolio approach, which enables fund managers to disclose a proxy-based holdings basket each morning without disclosing recent buys and sells. Contact us for an in-depth review of how this model aligns with your long term business plans.
ICE ETF Hub
Intercontinental Exchange, the parent company of the NYSE, plans to launch ETF Hub in October, a platform that will provide standards to simplify the creation and redemption process for equity and fixed income ETFs. ICE ETF Hub aims to drive further efficiencies in the primary markets as ETF assets continue to grow rapidly.
ETFs to Make NYSE Floor Debut
The NYSE received the first stage of regulatory approval for our ETF-specific Designated Market Maker (DMM) requirements, a key development that will enable ETF issuers to list their ETFs on the NYSE Floor. We’re eager to offer issuers the advantages of the human touch of a DMM – including smoother trading and reduced volatility – alongside a 227-year history of being the center of the global capital markets.
From the Capital
Following SEC approval, asset managers are closer to launching actively-managed, non-transparent ETFs utilizing Precidian ActiveShares® methodology. American Century is the first ETF issuer to file with the SEC for the future funds exemptive relief on a product leveraging the ActiveShares® methodology, and we hope to see listings go live before year’s end. The NYSE is supporting all active, non-transparent ETF products, so please contact our team for help in building a successful strategy.
The NYSE is pleased to see the SEC modernize regulation with the passage of Rule 6c-11 in September. The rule enhances the ETF marketplace by reducing costs and time-to-market for asset managers. The new standards, which encourage greater participation and allow issuers more flexibility with custom baskets, level the playing field in the ETF industry. We expect to see increased innovation as a result of this decision, and the NYSE looks forward to helping new entrants come to market.