What Is NYSE Arca?
Let me tell you directly: NYSE Arca is an electronic securities exchange in the U.S. where exchange-traded products (ETPs) and equities get listed. It focuses on ETPs, which cover exchange-traded funds (ETFs), exchange-traded notes (ETNs), and exchange-traded vehicles (ETVs).
Beyond standard orders, you can join opening and closing auctions for ETFs on NYSE Arca, and place midpoint orders that position right between the bid and ask prices.
Key Takeaways
NYSE Arca functions as an electronic platform for matching stock and ETP orders. It emerged from the 2006 merger between the New York Stock Exchange (NYSE) and Archipelago (Arca). This exchange handles the largest volume of ETF trading worldwide. Additionally, NYSE Arca Options manages matching and execution for listed options orders. By 2013, Intercontinental Exchange (ICE) had acquired both NYSE and NYSE Arca.
Understanding NYSE Arca
As the world's top ETF exchange by volume and listings, NYSE Arca held 16.5% of the ETF market share in exchange volume and listed 62.9% of the 3,380 U.S. ETFs as of January 2024.
Together with NYSE, it controls 75% of the $8.1 trillion in total assets under management for ETPs. You'll find the narrowest bid-ask spreads here, and it quotes the most time at the best prices across all U.S. ETPs.
Similar to other electronic communications networks (ECNs), NYSE Arca uses a liquidity fee/rebate program to boost market depth. For instance, market makers pay a fee to remove liquidity but get a rebate for adding it, with fees and rebates around $0.003 per share.
NYSE Arca Membership
NYSE Arca provides three membership levels for financial firms interested in market-making on the ECN. Standard market-making demands that members keep a two-sided market active at all times in their designated names.
Lead market makers (LMMs) act as the primary designated market makers for specific names, facing stricter standards and margin requirements.
The ETP Holder status suits institutions that skip market-making but want to route orders for ETPs on their own books or for clients. As of January 2024, about 135 firms hold NYSE Arca membership.
NYSE Arca Options
Besides a broad range of ETPs and equities, the platform matches orders and enables crosses for listed options, working with NYSE American and an open-outcry floor in San Francisco.
NYSE Arca Options follows a liquidity-focused maker/taker model, much like its equities and ETP operations.
NYSE Arca and Cryptocurrency Listed Funds
In late 2017, NYSE Arca applied to the SEC to list two ETFs tracking Bitcoin futures from Cboe and CME—the ProShares Bitcoin ETF and ProShares Short Bitcoin ETF.
The SEC has historically hesitated on Bitcoin ETFs due to the asset's speculative nature, but trading started on the ProShares Bitcoin Strategy ETF (BITO) in October 2021, as it tracks CME futures rather than holding Bitcoin directly.
By January 2024, the SEC approved 11 spot Bitcoin ETFs for listing on NYSE Arca, Cboe BZX, and Nasdaq. On May 23, 2024, the SEC approved applications from NYSE, CBOE, and Nasdaq for spot ether ETFs, with official approval for nine such ETFs in July 2024.
NYSE Arca History
NYSE Arca came about in 2006 when NYSE merged with Archipelago, a key electronic exchange network founded in 1996. Archipelago was among the first ECNs, enabling electronic trading on exchanges like Nasdaq and AMEX via ArcaEx, with features like automated trading, passive matching, after-hours access, and instant execution.
By the mid-2000s, its speed and liquidity drew institutional traders. Some critics feared the merger would kill traditional floor trading from 1817, but large-cap stocks still trade via open outcry on NYSE.
In 2007, NYSE merged with Euronext to form NYSE Euronext, which Intercontinental Exchange (ICE) later acquired, making ICE the parent of NYSE Arca.
What Is the Difference Between NYSE and NYSE Arca?
The NYSE operates as both a physical and electronic stock exchange, whereas NYSE Arca is purely an ECN for order matching.
Which Stocks Are on NYSE Arca?
NYSE Arca lists over 8,000 stocks and ETPs, meaning you can trade nearly every U.S.-listed individual stock and ETF here.
Who Owns NYSE Arca?
NYSE acquired Archipelago in 2006 to form NYSE Arca, and ICE acquired both by 2013; they operate as separate subsidiaries.
The Bottom Line
NYSE Arca is a network centered on ETPs like ETFs, ETNs, and ETVs. It's the largest ETF exchange globally, giving you access to sector funds and benchmark trackers.
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