Welcome! ETP Landscape will be an on-going effort by the NYSE ETP (Exchange Traded Product) group to inform, educate, and perhaps even entertain members of our ETP community, including investors, issuers, traders, administrators, vendors, counsel, and media. We will strive to cover topics of current interest, as well as upcoming events that may be of interest. Lets start with some background.
The term ETP refers to Exchange Traded Products. ETPs are categorized as several distinct legal and structural products which we define in the following way:
Exchange Traded Funds (Number listed: 858)
An Exchange Traded Fund (ETF) is an open-ended Registered Investment Company (RIC) or Unit Investment trust (UIT) that is registered under the Investment Company Act of 1940, and traded by investors on a registered national securities exchanges.
Exchange Traded Vehicles (Number listed: 67)
An Exchange Traded Vehicle (ETV) is an open-ended trust or partnership unit that is registered under the Securities Act of 1933 and traded by investors on a registered national securities exchange. This includes commodity and currency trusts.
Exchange Traded Notes (Number listed: 135)
An Exchange Traded Note (ETN) is a senior unsecured debt obligation, of a public company issuer, designed to track the total return of a underlying index or other benchmark, minus investor fees. They are redeemable to the issuer.
Certificates (Number listed: 89)
A Certificate is a security with the characteristics of a complex debt instrument. They are issued by a public company issuer (usually banks) and have settlement terms on a given date that are known at the time of issue. They can not be redeemed to the issuer.
The catalyst of the modern ETP industry was the 1993 launch of SPDR S&P 500 ETF Trust (symbol: SPY). New product development was slow at first with only 31 listed ETPs available for trading by the year 2000. In the following five years 2000 to 2005, ETPs gained some traction with 211 new listings or an average of 30 per year. By 2006 ETPs had hit the mainstream, establishing themselves as a way of gaining diversification via sector and/or asset class exposure. Between 2006 and 2010, new ETP listings averaged 174 per year. Today there are over 1,200 US listed ETPs with assets under management exceeding $1 trillion.
NYSE Arca is currently the leading listing venue for ETPs. As such, the ETP group is privileged to work with a wide range of issuers and trading firms in the process to launch, list, and efficiently trade many different kinds of products. One of our primary roles is to work with the Regulators to provide exchange rules that will apply to the trading of each product which requires that we be intimately familiar with the structure and mechanics of each product. In addition, we work closely with issuers and trading firms alike to encourage liquid and transparent secondary markets. Through the NYSE Arca Lead Market Maker Program, we seek to establish quoting standards and incentives which facilitate fair and orderly markets. Generally, since we are involved in so many aspects of an ETPs life cycle, we often act as an interface between and among issuers, trading firms, and the Regulators.
As a result, there is a tremendous amount of experience and broad expertise resident within the ETP group which can be leveraged to the benefit of all members of our ETP community. We hope to be able to share a good deal of that knowledge with you in future posts.