What is NYSE Arca?
NYSE Arca is an electronic securities exchange in the U.S. on which exchange-traded products (ETPs) and equities trade. 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 mid-point orders that sit between the bid and ask price.
Understanding NYSE Arca
As of March 2019, NYSE Arca was the world’s leading ETF exchange in terms of volume and listings. The exchange commands 19.5% of the ETF market share in the United States and lists over 2,238 individual ETFs. NYSE Arca listed ETFs have roughly $3.8 trillion in assets under management (AUM).
Much like other electronic communications networks (ECN), 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 range between $0.02 and $0.03 per share.
NYSE Arca History
NYSE Arca 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 NYSE, NASDAQ and American Stock Exchange, through the Archipelago Exchange (ArcaEx) in 2001. By the mid-2000s, Archipelago had widespread usage from institutional trading firms that utilized the exchange’s fast execution speeds and liquidity pools.
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. NYSE Arca’s parent company is Intercontinental exchange after it purchased NYSE Euronext in 2012.
NYSE Arca and Cryptocurrency Listed Funds
In late 2017, NYSE Arca resubmitted an application to the Securities and Exchange Commission (SEC) to list two ETFs that track bitcoin futures contracts traded on the Chicago Board Options Exchange (CBOE) 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. As of April 2019, permission from the SEC was not yet granted.