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BATS Global Markets, the Kansas-based stock exchange that competes with the New York Stock Exchange and Nasdaq, has landed a big endorsement.
WisdomTree, one of the leading sponsors of exchange-traded funds, is listing three of those funds on BATS for the first time.
The WisdomTree listings follow the news last week that two State Street ETFs would list on BATS, and a concerted effort from BATS to win business from the NYSE and Nasdaq.
Bryan Harkins, head of US markets at BATS, told Business Insider that the WisdomTree listings were a sign of the firm’s momentum.
“We want to be number one in ETF listings in a few years’ time,” he said.
The funds, which will start trading Thursday, are:WisdomTree Europe Local Recovery Fund, WisdomTree Strong Dollar Emerging Markets Equity Fund, and WisdomTree Global ex-US Hedged Real Estate Fund.
The growth of ETFs
Exchange-traded funds have exploded in number and size over the past 10 years. More than $1.4 trillion of net new ETF shares have been issued in the past decade, according to data from the Investment Company Institute, with US ETF industry assets at the end of 2014 coming to close to $2 trillion.
That means ETFsare making up a bigger percentage of total equity trading volume. BATS puts the figure at 25% of the consolidated market volume.
While BATS ranks as the No. 2 US market for total equities trading, and the top exchange operator for ETF trading, it has only around 36 exchange-traded products listed on its platform. That’s a tiny sliver of the more than 1,400 exchange-traded funds in the US.
That means it will have to win business from ETF issuers that have long used Nasdaq or the NYSE for their listings if it is to hit its target of becoming the No. 1 listings venue.
To that end, BATS announced two new incentive programs for issuers and market makers on October 1, and it is now in the middle of what Harkins called a fourth-quarter push to win business.
“The exchange can go to the large issuers and tell them that we’re trading their products better, we’re more focused on secondary liquidity, we’re cheaper, we’re additive for the ETF industry,” Harkins told Business Insider. “When you convince some of those issuers, they can make those decisions in bulk. They can decide to move buckets of products.
“We’re not going to be satisfied with a trickling of new listings.”