NEW YORK, March 20 (Reuters) - BATS Global Markets plans to aggressively expand its listings business for exchange-traded funds, with the goal of being the No. 1 ETF listing venue within three to five years, the head of the exchange operator’s U.S. markets said on Friday.
The company made its first foray into ETF listings in January 2012 with a handful of BlackRock Inc’s iShares ETFs. It is now home to 31 ETFs, with ProShares, ValueShares, and KraneShares also listing products on BATS.
BATS attempted to enter the corporate listings business in March 2012 by taking its own stock public on its own exchange, but a technical glitch caused the company to withdraw the offering and the plan was shelved indefinitely.
“Contrary to recent rumors that have surfaced in the media, we are not focusing right now on trying to start a corporate listings business,” Bryan Harkins, head of BATS’ U.S. markets, said in an interview. “We are focused on growing our ETF listings.”
There was a total of 1,411 U.S.-domiciled ETFs at the end of 2014, according to the Investment Company Institute, with more than 1,000 listed by Intercontinental Exchange’s NYSE unit and the balance by Nasdaq OMX Group.
While BATS has a long way to go to catch up to its competitors, Harkins said that with ETF assets growing at such a rapid pace, he believes BATS could be the top ETF listing venue within three to five years.
Over the past three years, the U.S. ETF industry has almost doubled, with assets under management at $2.1 trillion, up from $1.2 trillion in 2012, according to Lipper.
Regardless of where it is listed, an ETF can trade on any exchange. BATS is now the top U.S. exchange for ETF trading volume, which is a selling point for new issuers, Harkins said. BATS also touts its ETF market-making program, which gives cash rewards to market makers that put up their own capital to provide tight bid and ask spreads, so that others can get their trades done more easily at better prices.
BATS runs the second largest U.S. exchange group, by volume of shares traded, and it runs the biggest pan-European exchange. The company, based near Kansas City, also has an options exchange and recently entered the foreign exchange market with its $365 million acquisition of FX trading platform Hotspot from KCG Holdings Inc. (Reporting by John McCrank and Jessica Toonkel; Editing by Leslie Adler)