What Is NYSE Arca?

NYSE Arca is an electronic securities exchange in the U.S. on which exchange-traded products (ETPs) and equities are listed. The exchange specializes in ETP listings, which include exchange-traded funds (ETFs), exchange-traded notes (ETNs), and exchange-traded vehicles (ETVs). As well as placing typical orders, NYSE Arca allows investors and traders to participate in opening and closing auctions in ETFs and place midpoint orders that sit between the bid and ask price.

Key Takeaways

  • NYSE Arca is an electronic stock and exchange-traded product (ETP) exchange.
  • NYSE Arca was formed from the 2006 merger of the New York Stock Exchange (NYSE) and Archipelago (Arca).
  • NYSE Arca boasts the largest volume of ETF trading among all other exchanges in the world.

Understanding NYSE Arca

NYSE Arca is the world’s leading ETF exchange in terms of volume and listings. On March 31, 2021, the exchange commanded 17.35% of the ETF market share in the United States. It claimed to have 2,466 individual ETFs listed with $5.92 trillion in assets under management (AUM).

Much like other electronic communications networks (ECNs), NYSE Arca implements a liquidity fee/rebate program to improve overall market depth. For example, market makers are charged a fee to remove liquidity and provided with a rebate for adding it. Fees and rebates typically hover around $0.003 per share.

NYSE Arca History

NYSE Arca was formed in 2006 after the NYSE acquired Archipelago, a leading electronic exchange network. Created in 1996, Archipelago was one of the first ECNs to facilitate electronic trading on major U.S. exchanges, such as the Nasdaq and American Stock Exchange (AMEX), through the Archipelago Exchange (ArcaEx). ECNs allow for automated trading, passive order matching, after-hours trading, and instantaneous order execution.

By the mid-2000s, Archipelago's fast execution speeds and liquidity pools attracted widespread usage from institutional trading firms. Critics of the merger suggested it would end floor trading that has been in place since the NYSE’s inception in 1817. However, large-cap stocks continue to get traded on the NYSE using the open outcry method.

In 2007, NYSE completed a merger with Euronext, the largest European stock exchange, which led to the creation of NYSE Euronext. This entity was later acquired by Intercontinental Exchange (ICE), the current parent of the NYSE Arca.

NYSE Arca and Cryptocurrency Listed Funds

In late 2017, NYSE Arca submitted an application to the Securities and Exchange Commission (SEC) to list two ETFs that track bitcoin futures contracts traded on the Cboe Options Exchange and the Chicago Mercantile Exchange (CME)—the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF.

The SEC has traditionally been reluctant to approve bitcoin ETFs due to the cryptocurrency’s speculative and unregulated nature. NYSE Arca proposed that the two funds did not invest in bitcoin directly, but that did not alleviate the SEC's underlying concerns. In early 2019, Bitwise, another cryptocurrency ETF, filed to list on NYSE Arca but was disapproved by the SEC the same year.