What Is NYSE Arca?

NYSE Arca is an electronic securities exchange in the U.S. on which exchange-traded products (ETPs) and equities are listed. The exchange specializes in ETP listings, which include exchange-traded funds (ETFs), exchange-traded notes (ETNs), and exchange-traded vehicles (ETVs).

In addition to placing typical orders, NYSE Arca allows investors and traders to participate in opening and closing auctions in ETFs and place midpoint orders that sit between the bid and ask price.

Understanding NYSE Arca

NYSE Arca is the world’s leading ETF exchange in terms of volume and listings. As of January 2024, the exchange held a commanding 16.5% of the ETF market share of exchange volume and listed 62.9% of the 3,380 total ETFs in the United States.

With NYSE, it controls 75% of the $8.1 trillion in total assets under management (AUM) of exchange-traded products (ETPs). NYSE Arca also offers the narrowest bid-ask spreads and quotes the most time at the best price across all U.S. ETPs.

Much like other electronic communications networks (ECNs), NYSE Arca implements a liquidity fee/rebate program to improve overall market depth. For example, market makers (MMs) are charged a fee to remove liquidity and provided with a rebate for adding it. Fees and rebates typically hover around $0.003 per share.

NYSE Arca Membership

NYSE Arca offers three levels of exchange membership for financial firms that want to engage in market-making practices on the ECN. Standard market-making requires that members actively maintain a two-sided market at all times in the names that they make markets in. Lead market makers (LMMs) are the primary designated market makers in a given name and are held to more stringent standards and margin requirements.

The third status, ETP Holder, is a financial institution that does not wish to make markets but does want to use the exchange for order routing of exchange-traded products for its books or on behalf of its brokerage clients.

As of January 2024, NYSE Arca membership consists of around 135 member firms.

NYSE Arca Options

In addition to offering a wide breadth of exchange-traded products and other equities, the platform also matches orders and allows for crosses of listed options in conjunction with NYSE American (formerly AMEX) and an open-outcry trading floor in San Francisco, California.

NYSE Arca Options runs a model similar to its equities and ETP using a liquidity-focused market maker/taker model.

NYSE Arca and Cryptocurrency Listed Funds

In late 2017, NYSE Arca submitted an application to the Securities and Exchange Commission (SEC) to list two ETFs that track Bitcoin futures contracts traded on the Cboe Options Exchange and the Chicago Mercantile Exchange (CME)—the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF.

While the SEC has traditionally been reluctant to approve Bitcoin ETFs due to the cryptocurrency’s speculative and unregulated nature, in October 2021, trading began on the very first Bitcoin ETF, the ProShares Bitcoin Strategy ETF (BITO).

The SEC may have been more receptive to this particular crypto ETF because the fund does not invest directly in Bitcoin and instead tracks CME bitcoin futures—the contracts that speculate on the future price of Bitcoin.

In January 2024, the SEC took further steps to allow for Bitcoin ETF trading by approving 11 spot Bitcoin ETFs, listed on NYSE Arca, Cboe BZX, and Nasdaq.

NYSE Arca History

NYSE Arca was formed in 2006 after the NYSE merged with Archipelago, a leading electronic exchange network. Created in 1996, Archipelago was one of the first ECNs to facilitate electronic trading on major U.S. exchanges, such as the Nasdaq and American Stock Exchange (AMEX), through the Archipelago Exchange (ArcaEx). ECNs allow for automated trading, passive order matching, after-hours trading, and instantaneous order execution.

By the mid-2000s, Archipelago's fast execution speeds and liquidity pools attracted widespread usage from institutional trading firms. Critics of the merger suggested it would end floor trading that has been in place since the NYSE’s inception in 1817. However, large-cap stocks continue to be traded on the NYSE using the open outcry method.

In 2007, NYSE completed a merger with Euronext, the largest European stock exchange, which led to the creation of NYSE Euronext. This entity was later acquired by Intercontinental Exchange (ICE), which became the parent of the NYSE Arca.

The Bottom Line

NYSE Arca is a communications network focused on exchange-traded products, including ETFs, ETNs, and ETVs. It is the world's largest ETF exchange, offering investors access to funds that invest in sectors and track benchmarks.