NYSE Arca is an electronic securities exchange in the U.S. specializing in exchange-traded products (ETPs) and equities. ETPs include exchange-traded funds (ETFs), exchange-traded notes (ETNs), and exchange-traded vehicles (ETVs). The platform not only enables typical order placements but also allows participation in opening and closing auctions in ETFs, and places 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.
- NYSE Arca boasts the largest volume of ETF trading among all other exchanges in the world.
- NYSE Arca Options also caters to the execution of listed options orders.
- The Intercontinental Exchange (ICE) acquired NYSE and NYSE Arca by 2013.
Unleashing the Potential of NYSE Arca
NYSE Arca holds a commanding position as the world’s leading ETF exchange in terms of volume and listings. As of January 2024, it commanded 16.5% of the ETF market share in exchange volume and listed 62.9% of the 3,380 total ETFs in the United States.
With NYSE, it controls 75% of the $8.1 trillion in total assets under management (AUM) of exchange-traded products (ETPs). NYSE Arca also offers the narrowest bid-ask spreads and quotes most of the time at the best price across all U.S. ETPs.
NYSE Arca Membership
NYSE Arca offers three levels of exchange membership for financial firms engaged in market-making practices on the ECN. Standard market-making requires that members maintain a two-sided market at all times in the names they aim to make markets in.
Lead market makers (LMMs) are the primary designated market makers in a given name and are held to more stringent standards and margin requirements.
The third status, ETP Holder, involves financial institutions that do not wish to make markets but look to use the exchange for order routing of ETPs for its books or on behalf of brokerage clients. As of January 2024, NYSE Arca had approximately 135 member firms.
Innovating with NYSE Arca Options
Beyond a wide array of ETPs and other equities, NYSE Arca also matches orders of listed options in conjunction with NYSE American. This extension incorporates a similar liquidity-focused market maker/taker model as its equities and ETPs.
Pioneering with Cryptocurrency Listed Funds
In late 2017, NYSE Arca took a significant step by applying to list two ETFs that track Bitcoin futures contracts. The SEC initially hesitated but eventually approved the launch of the ProShares Bitcoin Strategy ETF (BITO), which tracks CME bitcoin futures.
In January 2024, the SEC further widened the horizon by approving 11 spot Bitcoin ETFs listed on NYSE Arca, Cboe BZX, and Nasdaq.
A Glance at NYSE Arca’s Transformation
NYSE Arca was born in 2006 from the merger of the NYSE and Archipelago, an electronic exchange network. With Archipelago, founded in 1996, early EFThealthing began to show promise, and its rapid execution speeds soon attracted institutional trading firms.
The formation of NYSE Arca went hand in hand with a merger with Euronext in 2007, creating NYSE Euronext, later acquired by the Intercontinental Exchange (ICE), the parent company of NYSE Arca.
NYSE and NYSE Arca: A Comparative Insight
The New York Stock Exchange (NYSE) is a physical and electronic stock exchange, while NYSE Arca operates as an electronic communications network (ECN) for matching orders.
Comprehensive Range of Listings
NYSE Arca lists more than 8,000 stocks and exchange-traded products. This vast repertoire ensures that virtually every individual stock and ETF traded in the U.S. enters the NYSE Arca trading environment.
Ownership and Legacy
NYSE Arca was birthed from the NYSE’s acquiring of Archipelago in 2006. Later, the Intercontinental Exchange (ICE) acquired both NYSE and NYSE Arca by 2013. While remaining distinct subsidiaries, their combined prowess continues to define market benchmarks.
Embracing the Future with NYSE Arca
NYSE Arca is an influential communication network focusing primarily on exchange-traded products, including ETFs, ETNs, and ETVs. As the world’s largest ETF exchange, it stands at the forefront of investment horizons.
Related Terms: Exchange-Traded Funds, Market Makers, Electronic Communication Network, Intercontinental Exchange, NYSE Euronext, Bid-Ask Spread.
References
- U.S. Securities and Exchange Commission. “New York Stock Exchange/Archipelago Holdings Merger Complete”.
- NYSE. “The History of NYSE”.
- NYSE. “Home of ETFs”.
- NYSE Arca. “Lead Market Making”.
- NYSE. “Membership”.
- NYSE. “Membership Directory”. Download CSV file.
- NYSE. “Two Market Models Powered by One Cutting Edge Technology”. Pages 3, 6.
- U.S. Securities and Exchange Commission. “Notice of Filing of 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”.
- ProShares. “ProShares To Launch the First U.S. Bitcoin-Linked ETF on October 19.”
- U.S. Securities and Exchange Commission. “Self-Regulatory Organizations; NYSE Arca, Inc.; The Nasdaq Stock Market LLC; Cboe BZX Exchange, Inc.; Order Granting Accelerated Approval of Proposed Rule Changes, as Modified by Amendments Thereto, to List and Trade Bitcoin-Based Commodity-Based Trust Shares and Trust Units”.
- IVCA. “Archipelago Holdings Inc”.
- NYSE. “The History of NYSE”.
- NYSE. “Behind the Scenes — An Insider’s Guide to the NYSE Closing Auction”.
- U.S. Securities and Exchange Commission. “Prospectus of NYSE Euronext, Inc.” Page 1.
- ICE. “IntercontinentalExchange Completes Acquisition of NYSE Euronext”.
- NYSE. “NYSE Arca Equities”.
- NYSE. “The History of NYSE”.
- NYSE. “The History of NYSE”.
