“As part of Van Eck’s continuous risk assessment analysis, listing venue diversification has been identified as one element of our firm-wide strategy,” Ed Lopez, Director and Head of ETF Product Management, said. “Van Eck maintains a strong relationship with both NYSE Arca and NASDAQ and we thank them for their commitment to the ongoing success of the diverse ETP marketplace.”
By shopping around to find a primary listing venue, ETF providers could determine which type of exchange has the most beneficial rules and procedures to ensure orderly trades and ETF prices. As the markets have witnessed, ETFs with the most efficient trades are also the more popular, or quick to attract assets.
The recent changes may also be a result of the market shake-up in late August last year that resulted in large swings in a number of ETFs. On August 24, trading pauses in 471 individual securities known as LULD halts – limit up, limit down – occurred 1,278 times, which means that many experienced multiple halts, Michael P Regan reported for Bloomberg.
In an October report, BlackRock has stated that delays in the market open during periods of extreme volatility “are particularly harmful as they contribute to market uncertainty and alarm investors,” reported Miles Weiss for Bloomberg. On the other hand, BlackRock pointed out that BATS and Nasdaq were able to promptly open “in an automated fashion” on August 24 when volatility spiked while NYSE-listed equities were subjected to “excessive delays.”
“We believe it is in the best interest of ETF shareholders, our member firms and issuers to support harmonization on how ETFs resume trading after a limit-up-limit down (LULD) halt or reference prices at the open in the event an ETF does not have an opening print,” Jeff McCarthy, Vice President & Head of Exchange Traded Product Listings at Nasdaq, told ETF Trends.
Many in the industry have argued that the volatility in ETFs in August was a result of structural problems. Consequently, more fund providers may be shopping around different listing venues to find a better fit.
Max Chen contributed to this article.