Bats Boosts ETP Market Incentive Schemes
Bats.com – KANSAS CITY and NEW YORK – Bats Global Markets, Inc. (Bats: BATS), the #1 market globally for trading in exchange-traded products (ETPs) today announced changes to its incentive schemes for market makers who play a pivotal role throughout the life cycle of ETPs.
Previously, the Exchange had offered an Issuer Incentive Program for all ETPs. This unique payment program allowed an issuer to benefit from listing on Bats by providing an annual incentive payment of up to $400,000 to each fund with a Consolidated Average Daily Volume (CADV) over 1 million shares per day. Following extensive consultation with ETP industry participants, Bats filed yesterday to redirect these rebates to the Lead Market Makers (LMMs) for qualifying products. The scheme, called the Lead Market Maker Partnership Program, will become effective on September 1, 2016.
“We are committed to helping our issuers grow the assets under management and liquidity of their listed products, and separately, ensure that liquidity provision is sustainable throughout an ETP’s lifecycle. By further incentivizing market makers, through the most competitive ETP incentive scheme available globally, they will be able to provide deeper and more resilient liquidity to all their assigned products,” said Laura Morrison, Senior Vice President and Global Head of Exchange Traded Products at Bats.
Similar to the initial Issuer Incentive Program, the CADV ranges per-product will dictate the rebate available to LMMs, as follows: CADV Range Annualized Payment 1,000,000 – 3,000,000 shares $3,000 3,000,001 – 5,000,000 shares $10,000 5,000,001 – 10,000,000 shares $50,000 10,000,001 – 20,000,000 shares $100,000 20,000,001 – 35,000,000 shares $250,000 Greater than 35,000,000 shares $400,000.
Speaking on the change, Bryan Harkins, Executive Vice President and Head of U.S. Markets remarked, “Our pioneering, nimble nature allows us to experiment and adjust where necessary to best suit the markets and participants we serve. In this instance, the excellent dialogue we have with ETP industry participants, and in particular, our fast-growing and very diverse family of issuers and market-makers, has led us to make this change to our incentive schemes,” remarked Bryan Harkins, Executive Vice President and Head of U.S. Markets. “This game-changing incentive program is built on the premise that, in order for market makers to better support trading in ETPs across a varying liquidity spectrum, they should be rewarded with incentives generated from the most liquid of products. That allows them, in turn, to better support newer and less liquid ETPs with higher quality markets as issuers look to garner more assets,” he added.
During July, Bats remained the largest U.S. market operator for ETF trading, executing 23.8% of all volume during the month. So far this year 28% of all new U.S. ETF listings have joined the Bats ETF Marketplace, and the Exchange now lists a total of 98 ETFs among 15 issuers. Bats will continue to offer free listings to all ETF issuers, in both the U.S. and Europe.
The changes were made to better reflect the evolving nature and spirit of the company.
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