2018 was another historic year for the global equity markets as we witnessed the return of significant volatility. However, market dynamics did little to stem the impressive growth we saw from our community of ETF issuers at the New York Stock Exchange - The Home of ETFs.
Last year we were delighted to welcome 16 new ETF issuers, and NYSE Arca closed out the year with $2.7 trillion in Assets Under Management. In addition, the NYSE ETF Team helped to grow the U.S. marketplace, bringing 179 new ETFs to market. Overall, it was another fantastic year and we are proud to maintain our position as the #1 exchange for ETF liquidity worldwide.
2018 was about driving innovation and improving the mechanics and efficiencies of our markets to enhance ETF trading and liquidity. This remains our focus for the coming year and we have many exciting plans to further advance U.S. ETF markets.
We look forward to seeing you at Inside ETFs in February, and helping you to achieve your business goals in 2019.
Last year, one of the most impactful NYSE innovations for the global ETF industry was the development, SEC approval, and implementation of our new mechanism to calculate the official closing price for NYSE-listed ETFs. Our patent-pending methodology was designed to ensure that the closing (globally relied-upon) prices for NYSE-Arca Listed securities are closer to their underlying Net Asset Value (NAV). Since implementation in June 2018, NYSE Arca Listed ETFs close on average 59% closer to their NAV than Nasdaq-listed ETFs, and 97% closer than Cboe-listed ETFs. Importantly for the marketplace, this new closing price mechanism is providing global investors with a more accurate reference point of their ETF’s true value each and every day. The positive impact has been felt by advisors, investors, platforms, model portfolios of ETFs, asset managers, and fund-of-funds using underlying ETFs.
In late December, the SEC announced its decision to proceed with a Transaction Fee Pilot, with their stated aim to test how exchange incentives and pricing impact broker routing behavior. We believe this pilot is a risky experiment that will erode the quality of our markets, and is particularly troubling given it was designed during a period of prolonged low volatility and will be implemented now that volatility has returned.
While the SEC made some small changes to the pilot compared to its original proposal, the finalized pilot will include all listed securities that have an average daily trading volume greater than or equal to 30,000 shares with a share price that is equal to or greater than $2.00. ETFs are included in the universe of eligible securities. The SEC is yet to announce when the pilot will commence or which securities will be included. The NYSE ETF Team is focused on providing you with timely updates on the Pilot and are available to answer questions.
On June 28, 2018, the SEC proposed a new ETF Rule designed to standardize and modernize the regulatory framework for most ETFs. This proposal would permit ETFs that satisfy certain conditions to operate within the scope of the Investment Company Act of 1940. Effectively this means that ETFs could come directly to market without the cost and delay of obtaining an exemptive order. The proposed rule would require enhanced website disclosures by ETF issuers, and will allow for the utilization of custom purchase and redemption baskets. Learn more about the ETF Rule proposal which is still moving through the regulatory approvals process.
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