What Is NYSE Arca?
NYSEArca 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, NYSEArca 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.
- The Intercontinental Exchange (ICE) acquired NYSE and NYSE Arca by 2013.
Understanding NYSE Arca
NYSEArca is the world’s leading ETF exchange in terms of volume and listings. As of January 2024, the exchange held a commanding 16.5% of the ETF market share of 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 the most time at the best price across all U.S. ETPs.
Much like other electronic communications networks (ECNs), NYSEArca 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.
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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 makers in a given name and are held to more stringent standards and margin requirements.
The third status, ETP Holder, is a financial institution that does not wish to make markets but does want to use the exchange for order routing of exchange-traded products for its books or on behalf of its brokerage clients.
As of January 2024, NYSE Arca membership consists of around 135 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 an open-outcry trading floor in San Francisco, California.
NYSE Arca Options runs a model similar to its equities and ETP using a liquidity-focused market maker/taker model.
NYSEArca and Cryptocurrency Listed Funds
In late 2017, NYSEArca 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 ProSharesBitcoin 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 because the fund does not invest directly in Bitcoin and instead tracks CME bitcoin futures—the contracts that speculate on the future price of Bitcoin.
In January 2024, the SEC took further steps to allow for Bitcoin ETF trading by approving 11 spot Bitcoin ETFs, listed on NYSE Arca, Cboe BZX, and Nasdaq.
NYSEArca History
NYSEArca was formed in 2006 after the NYSE merged with Archipelago, a leading electronic exchange network. Created in 1996, Archipelago was one of the first ECNsto facilitate electronic trading on major U.S. exchanges, such as the Nasdaq and American Stock Exchange (AMEX), through the Archipelago Exchange (ArcaEx). ECNs allow forautomated 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 be traded on the NYSE using the open outcry method.
In 2007, NYSE completed a merger withEuronext, the largest European stock exchange, which led to the creation of NYSE Euronext. This entity was later acquired by Intercontinental Exchange (ICE), which became the parent of the NYSE Arca.
What Is the Difference Between NYSE and 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. The Intercontinental Exchange (ICE) acquired both NYSE and NYSE Arca by 2013. They remained separate and distinct subsidiaries.
The Bottom Line
NYSE Arca is a communications network focused on exchange-traded products, including ETFs, ETNs, and ETVs. It is the world's largest ETF exchange, offering investors access to funds that invest in sectors and track benchmarks.
