NYSE Arca: Definition, History, Funds, Membership, and Options

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).

In addition to 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) order matching platform.
  • 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.
  • NYSE Arca Options also allows for order matching and execution of listed options orders.
  • Today, both NYSE and NYSE Arca are owned by the Intercontinental Exchange (ICE).

Understanding NYSE Arca

NYSE Arca is the world’s leading ETF exchange in terms of volume and listings. As of December 2021, the exchange held a commanding 16.3% of the ETF market share in the United States. It claimed to have 2,890 individual ETFs listed with $7.14 trillion in total assets under management (AUM). NYSE Arca also offers the narrowest bid-ask spreads and quotes the most time at the best prices across all U.S. ECNs.

Top NYSE Arca ETFs

The top 5 ETFs traded on the platform by annual cash flow include the Invesco Optimum Yield Diversified Commodity Strategy No K-1 (PDBC), JPMorgan Equity Premium Income (JEPI), First Trust Global Tactical Commodity Strategy Fund (FTGC), SPDR Blackstone Senior Loan (SRLN), and JPMorgan Ultr-Short Municpal Income (JMST).

Much like other electronic communications networks (ECNs), NYSE Arca implements a liquidity fee/rebate program to improve overall market depth. For example, market makers (MMs) 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 Comparisons
NYSE Arca Comparisons.

NYSE Arca Membership

NYSE Arca offers three levels of exchange membership for financial firms that want to engage in market-making practices on the ECN. Standard market-making requires that members actively maintain a two-sided market at all times in the names that they make markets in. Lead market makers (LMMs) are the primary designated market maker in a given name and are held to more stringent standards and margin requirements.

The third status, ETP Holder, are financial institutions that do not wish to make markets but do want to use the exchange for order routing of exchange-traded products for their own books or on behalf of their brokerage clients.

As of April 2022, NYSE Arca membership consists of around 150 member firms.

NYSE Arca Options

In addition to offering a wide breadth of exchange-traded products and other equities, the platform also matches orders and allows for crosses of listed options in conjunction with NYSE American (formerly AMEX) and the open-outcry trading floor of the Pacific Stock Exchange (PCX) in San Francisco, CA.

NYSE Arca Options runs a model similar to its equities and ETP using a liquidity-focused market maker/taker model.

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.

While the SEC has traditionally been reluctant to approve bitcoin ETFs due to the cryptocurrency’s speculative and unregulated nature, in October 2021, trading began on the very first bitcoin ETF, the ProShares Bitcoin Strategy ETF (BITO).

The SEC may have been more receptive to this particular crypto ETF due to the fact that the fund does not invest directly in bitcoin and instead tracks CME bitcoin futures—the contracts that speculate on the future price of bitcoin. Many applications for crypto and bitcoin ETFs are still pending approval by the SEC. However, with the price of bitcoin reaching an all-time high of $66,000 after news broke of the ProShares ETF, many fund managers are vying for the SEC's approval.

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.


What Is the Difference Between the NYSE and the NYSE Arca?

The New York Stock Exchange (NYSE) is a physical and electronic stock exchange, while NYSE Arca is an electronic communications network (ECN) used for matching orders.

Which Stocks Are on NYSE Arca?

NYSE Arca lists more than 8,000 stocks and exchange-traded products. This means that virtually every individual stock and ETF traded on a U.S. stock exchange will also be available to trade on NYSE Arca.

Who Owns NYSE Arca?

NYSE Arca was formed when the NYSE acquired the Archipelago ECN in 2006. While both NYSE and NYSE Arca are now owned by the Intercontinental Exchange (ICE), they remain separate and distinct subsidiaries.

Article Sources
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  2. NYSE. "NYSE Arca Market Quality."

  3. NYSE. "NYSE Arca Q1 2022 Quarterly ETF Report."

  4. NYSE Arca. "Market Quality."

  5. NYSE. "Recap of Q1 2022."

  6. Intercontinental Exchange. "NYSE Arca Equities, Fees and Charges," Page 3.

  7. NYSE Arca. "Membership."

  8. NYSE Arca. "NYSE Arca Options."

  9. U.S. Securities and Exchange Commission. "Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change to List and Trade the Shares of the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF under NYSE Arca Rule 8.200-E, Commentary .02."

  10. ProShares. "ProShares to Launch the First Bitcoin-Linked ETF on October 19."

  11. YCharts. "Bitcoin Price."

  12. IVCA. "Archipelago Holdings Inc."

  13. The New York Times. "Big Board Seen in Step to End Floor Auctions."

  14. U.S. Securities and Exchange Commission. "Prospectus of NYSE Euronext, Inc.," Page 1.

  15. ICE. "IntercontinentalExchange Completes Acquisition of NYSE Euronext."

  16. NYSE. "NYSE Arca Equities."

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