ICE launches ETF ecosystem to standardise marketplace

ICE ETF Hub is an open architecture platform designed to standardise the ETF primary market where shares ETFs are created and redeemed.

US exchange operator ICE has made moves to support the ongoing growth in exchange-traded funds (ETFs) with the launch of a technology-powered ecosystem to create and redeem ETF orders.

Known as the ICE ETF Hub, the platform was designed in consultation with issuers, authorised participants, market makers and custodians to offer a more standardised and automated process for assembling and placing creation and redemption baskets.

The hub is now live for domestic equities, with support for fixed income expected to go live in the fourth quarter this year. ICE will also add access to ICE Data Services pricing, reference data and analytics, as well as connections to ICE BondPoint and TMC Bonds for execution protocols.

“Even with the increase in assets and trading volumes over the last ten years, faster growth has been inhibited due to the lack of standardisation in the primary market,” said Ben Jackson, president of ICE. “Applying innovative technology solutions that improve market efficiency has long been our hallmark and we look forward to working with our partners to bring this platform forward.”

According to research from BlackRock, there is room for major growth in ETFs with the instruments currently representing around 9% of the US equity market and under 2% of the US bond market. Globally, ETFs have increased to more than $5.7 trillion of assets under management as of 30 September this year.

“BlackRock has long been an advocate for establishing standard and accessible processes for the ETF ecosystem,” added Samara Cohen, co-head of iShares markets and investments at BlackRock. “As the growth of the ETF industry accelerates, it is essential for the infrastructure powering the market to scale rapidly. The ETF Hub brings new efficiencies to the market and creates an open environment where participants can interact effectively to offer greater choice for our clients.”

Last month, the US securities regulator voted to adopt new rules to speed up the time it takes to bring ETF products to market in response to calls to modernise the existing regulatory framework for ETFs. ICE welcomed the move, particularly the use of custom baskets, adding that the rules will offer significant benefits to the entire ETF ecosystem.

“With ETFs being an important aspect of our franchise strategy, we are always looking for ways to introduce efficiency into our operating model,” Christopher Berthe, JP Morgan’s co-head of cash trading, commented on the launch. “ETF Hub helps position us to achieve this through their standardized workflows and increased efficiency.”