iShares, the ETF market leader in the U.S. with more than 200 individual funds across virtually every asset class, will notch another first for the industry later this month when it becomes the first ETF provider to list products on the BATS Exchange. January 24 will mark the first day of trading for eight new iShares ETFs on the BATS, with each of the upcoming products offering single-country exposure to an international stock market:
- MSCI Norway Capped Investable Market Index Fund (BATS:ENOR)
- MSCI Australia Small Cap Index Fund (BATS:EWAS)
- MSCI Canada Small Cap Index Fund (BATS:EWCS)
- MSCI Finland Capped Investable Market Index Fund (BATS:EFNL)
- MSCI Germany Small Cap Index Fund (BATS:EWGS)
- MSCI India Index Fund (BATS:INDA)
- MSCI India Small Cap Index Fund (BATS:SMIN)
- MSCI United Kingdom Small Cap Index Fund (BATS:EWUS)
EFNL will become the first U.S.-listed ETF offering exposure to Finland; currently, the most significant allocation to that market is found in the Global X FTSE Nordic 30 ETF (GXF weights about 13% to Finland). The other first-to-market product in the group will be the small cap UK ETF; currently, iShares’ MSCI United Kingdom Index Fund (NYSEARCA:EWU) is the only ETF linked to UK stocks. EWU has amassed about $1.3 billion in assets under management since launching in 1996.
The move also represents a significant expansion of iShares’ lineup of small cap international equity ETFs. Already in 2012, the company has rolled out small cap ETFs targeting Singapore (NYSEARCA:EWSS) and Hong Kong (NYSEARCA:EWHS) to join funds focused on Brazil (NYSEARCA:EWZS), China (NYSEARCA:ECNS), emerging markets (NYSEARCA:EEMS), and developed ex-U.S. markets (IFSM). Other issuers already offer ETFs linked to indexes consisting of small cap stocks from Australia (NYSEARCA:KROO), Canada (NYSEARCA:CNDA), Germany (NYSEARCA:GERJ), and India (NYSEARCA:SCIN).
ABCs On BATS
BATS operates stock and options markets out of Kansas City and London. The company reported market share of 11.2% in the U.S. in December, up from about 9.5% during the same period in 2010. BATS has a considerably larger presence in Europe, where it holds about a quarter of the market. BATS is the third largest market operator in the U.S., trailing NYSE Euronext and Nasdaq OMX. Similar to the game plan for ETF issuers to attract money from mutual funds, BATS is aggressively competing on cost. The initial listing fee for the exchange is $100,000, which is less than half of what the two other major exchanges charge. Annual fees come in at a flat $35,000; those costs can run as high as $99,500 on the Nasdaq and up to $500,000 for the largest companies on the NYSE [see also How ETF Investors Can Save $415 Million].
BATS has filed to publicly list its shares on its own exchange under the ticker BATS. An IPO could come during 2012, with the company seeking to raise $100 million in cash.
“We’re pleased to be the first ETF provider to list products on BATS Exchange and believe it demonstrates our continued commitment to bringing clients the most innovative and highest quality products,” said Noel Archard, Global Head of Product Development & Management for iShares at BlackRock. “We appreciate the partnership and the innovative approach they are bringing to the market.”
Disclosure: No positions at time of writing.
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