- Firm cites diversification in listing ETFs on Nasdaq, Bats
- IShares listing relocation includes 9 equity and 2 bond funds
BlackRock Inc., in a bid to diversify among the primary markets that host exchange-traded funds, plans to move 11 of its iShares ETFs off of NYSE Arca Inc.
The world’s largest asset manager, BlackRock said in a statement Tuesday that 10 iShares funds will switch their primary listing to the Nasdaq Stock Market. An 11th fund, the iShares MSCI Eurozone ETF, will move to Bats Global Markets Inc. The moves are scheduled to take place around Feb. 2.
Samara Cohen, BlackRock’s U.S. head of iShares Capital Markets, said in the release that “diversification” is an important element of the firm’s listing strategy for ETFs, adding that the move “encourages continuous innovation” and “ultimately improves the client experience.”
NYSE Arca says it serves as the primary listing exchange for more than 93 percent of exchange-traded product assets under management in the U.S. Its dominance dates back to the American Stock Exchange, where the first ETFs were originally listed, including the $179 billion SPDR S&P 500 ETF Trust. The New York Stock Exchange, now owned by the Intercontinental Exchange Inc., acquired the American Stock Exchange in 2008.
BlackRock’s diversification effort could help the firm determine which type of exchange has the most favorable rules and procedures for ensuring the orderly trading and pricing of ETFs. After an August market disruption caused wild price swings in ETFs, BlackRock published a report that, among other things, urged sponsors of exchange-traded products to work with exchanges such as NYSE Arca and Nasdaq toward improvements in market structure.
New York-based BlackRock is relocating nine equity ETFs, including the $2 billion iShares MSCI China ETF and the $13.9 billion iShares MSCI Eurozone ETF. The firm is also moving two bond ETFs to Nasdaq, including the $6.1 billion iShares 20+ Year Treasury Bond ETF and the $110 million iShares 0-5 Year Investment Grade Corporate Bond ETF.
Once the changes take place, there will be 31 iShares ETFs listed on the Nasdaq and 27 on Bats, according to Melissa Garville, a BlackRock spokeswoman. The firm will have 267 ETFs listed on the NYSE Arca.
BlackRock’s largest ETF on the Nasdaq is the $7.9 billion iShares Nasdaq Biotechnology ETF. Its largest NYSE Arca-listed ETF is the $69 billion iShares Core S&P 500 ETF.
The choice of exchange for listing a stock or ETF doesn’t necessarily dictate where most of its trading will take place, given that many transactions are executed on venues such as alternative trading systems that match buyers and sellers. But one key difference between the NYSE Arca and the Nasdaq is that the latter uses a more automated process to open and close trading for listed stocks and ETFs, according to Howard Kramer, a securities lawyer at Willkie Farr & Gallagher in Washington.
“New York still has the ability of the designated market maker to interject himself and slow down the process” to restrain volatility, Kramer said in an interview. “That’s not necessarily a bad thing,” he said, but there is a trade-off between the ability to damp volatility “versus slowing down the process of opening or closing.”
BlackRock said in its October report that delays in the market open during periods of extraordinary volatility “are particularly harmful as they contribute to market uncertainty and alarm investors.” The firm said exchanges such as Bats and the Nasdaq were able to promptly open “in an automated fashion” on Aug. 24, when volatility spiked as unusual price moves affected many stocks and exchange-traded products, while NYSE-listed equities were subjected to “excessive delays.”
Sara Cohen, a spokeswoman for NYSE Arca, declined to comment on BlackRock’s moves.