On November 30, Proshares, a leading provider of ETFs in the United States, announced that four of its ETFs will no longer be trading on the New York Stock Exchange, choosing instead to list on the BATS ETF Marketplace.
These aren’t the first ETFs to make the switch, either. BATS ETF Marketplace has quietly become a major ETF trading platform in the United States, with a 27.2% market share in the month of October. The exchange also has the lowest effective spread for approximately half of the top 100 U.S.-listed ETFs.
So what gives? Why is so much ETF trading moving away from the United States’s largest exchange?
The big reason comes down to money. There are no listing fees for putting an ETF on the BATS Marketplace and there are no annual fees either. This is a huge advantage to smaller ETFs with not a whole lot in assets.
BATS also offers a market maker program designed to increase liquidity for burgeoning ETFs.
And the company makes it easy to transfer existing ETFs to its platform as well, getting the whole process done in as little as 15 days.
BATS isn’t just a major ETF trader. The alternate exchange has grown to be a huge player in individual stocks, too. Many online brokers will automatically route orders through BATS because it offers lower overall costs without taking a hit on liquidity. Besides, liquidity isn’t a big problem for retail investors trading a few hundred shares at a time.
