ICE Debuts ICE ETF Hub
Intercontinental Exchange, Inc., a leading operator of global exchanges and clearing houses and provider of data and listings services, today announced the launch of ICE ETF Hub, a new platform that is designed to enable the next phase of growth in the ETF market. ICE ETF Hub is an open architecture platform designed to bring efficiencies and standardization to the ETF primary trading market, where shares of ETFs are created and redeemed.
The Global ETF market has experienced tremendous growth over the last decade, with assets under management (AUM) of over $5.7 trillion as of September 30, 2019. Even still, ETFs are 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, according to recent research from BlackRock – indicating there is still significant room for growth.
“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,” said Ben Jackson, President of Intercontinental Exchange. “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,” Jackson added.
Working closely with the ETF community of issuers, authorized participants, market makers and custodians, ICE ETF Hub was created to support further growth in the ETF market. The new ecosystem leverages the many strengths of ICE across connectivity, data, execution, and analytics to establish a robust platform for ETF primary trading. By creating new standards and protocols for the primary market, ICE ETF Hub is designed to reduce inefficiencies in the ETF create/redeem workflow – and lead to increased participation across the marketplace.
“BlackRock has long been an advocate for establishing standard and accessible processes for the ETF ecosystem,” said Samara Cohen, Co-Head of iShares Markets and Investments, BlackRock. “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.”
“With ETFs being an important aspect of our franchise strategy, we are always looking for ways to introduce efficiency into our operating model,” said Christopher Berthe, J.P. Morgan Co-Head of Cash Trading. “ETF Hub helps position us to achieve this through their standardized workflows and increased efficiency.”
ICE ETF Hub aims to offer 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.
“As one of the largest ETF Authorized Participants, we appreciate ETF Hub’s value proposition,” said Peter O’Malley, head of US ETF Distribution for BofA Securities, Inc. “The ETF market continues to grow and is increasingly complex, making the operational efficiencies and standardization ICE ETF Hub provides beneficial for participants and our clients.”
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.
ICE ETF Hub is currently live with domestic equities, and support for fixed income is expected to come on line in the fourth quarter of 2019. Additional functionality, including support for custom baskets and U.S.-listed international exposures, is planned to be added in 2020.
Global ETFs had record net inflows of $1.3 trillion in 2021.
Passive funds represented nearly all U.S. equity inflows.
Centrally cleared and settled transactions have been in continuously increasing demand.
The collaboration allows Citi to scale its fixed income ETF servicing business.
The majority of US ETF issuers are either developing or planning to develop transparent active ETFs.