BATS is bringing the fee war to exchanges as it announces annual fee waivers for exchange traded funds, potentially cutting costs for end investors.
According to BATS Exchange, exchange traded products, which include both ETFs and exchange traded notes, that trade a three-month consolidated average daily volume of 400,000 shares per day or more will pay no fees to list on BATS. The exchange lowered its requirement from 2 million shares per day.
ETPs that trade with an average of less than 400,000 shares per day will incur annual fees that range from $5,000 to $18,000 on BATS.
“As an exchange, you’re not making money on ETP listing fees, you’re making money on trading,” Richard Keary, principal of Global ETF Advisors, said in a Financial Times report. “[BATS] recognises all of these issues by getting to the point of free listings.”
BATS calculates that 223 ETPs would meet the volume requirements to list free of charge on its exchange.
There are currently 23 listed ETFs on the BATS exchange, including 18 iShares offerings and 5 ProShares funds. The iShares MSCI Norway Capepd ETF (BATS: ENOR) was the first ETF to be listed on January 24, 2012. The iShares Liquidity Income ETF (BATS: ICSH) was the most recent listing on December 13, 2013.
Additionally, BATS is sweetening the deal with an initial fee waiver for ETFs that want to move their listing from competing exchanges, like NYSE Arca or Nasdaq.
NYSE Arca is home to the majority of ETFs, accounting for more than 1,200 of almost 1,600 U.S.-listed ETFs on the market. NYSE Arca also charges between $5,000 and $40,000 per year on ETFs, depending on number of shares outstanding, while Nasdaq issues fees ranging between $6,500 to $14,500, depending on how many shares on the market.
Most ETFs try to reflect the performance of a specific market, before expenses. With zero annual exchange fees, some of the popular ETFs can experience lower tracking errors and help the end investors achieve more efficient returns.
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.