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Laura Morrison, Cboe

Cboe celebrates growth in ETF listing business


Cboe Global Markets announced that it had become the second largest primary listing exchange for ETFs in the US at the beginning of December 2020, with some 400 ETPs representing over USD370 billion in assets and 36 per cent of all new ETP launches captured on its exchange in 2020.

Laura Morrison (pictured), Global Head of Listings at Cboe, explains that these figures represent a 1,400 per cent growth in the exchange’s listing business since 2015.

“We have seen incredible growth in the US and Europe,” she says, and expansion in Canada is also on the cards, post Cboe’s recent acquisition of Toronto-based MATCHNow, the largest alternative trading system in Canada.

In 2020, the exchange had taken 114 of the 318 ETF launches in the US. “We have seen new and innovative products come to market last year,” she says, commenting on the first semi-transparent ETF launch in the US in April.

“The semi-transparent ETF is the next generation mutual fund,” Morrison says. “You don’t need to disclose your underlying holdings on a daily basis and we are very proud to have received the first approval to launch these types of products with American Century in April, ClearBridge in May, Fidelity in June and then Invesco in December. We also have products from BlackRock and JP Morgan in the pipeline as the new structure gives asset managers the ability to keep portfolio holdings confidential for some time.”

Another key area of growth has been the structured outcome product range offered by Innovator, First Trust and TruMark.

“Essentially these are tools that enable investors to hedge their portfolios using FLEX options traded on Cboe. There are currently 72 structured outcome ETFs listed on our exchange, representing more than 95 per cent of the assets in this category of ETFs,” she says.

Morrison joined Bats Global Markets in May 2015 and arrived at Cboe through its purchase of Bats in early 2017.  At the time, the exchange had just 31 products listed. The Bats purchase brought new state-of-the-art technology infrastructure to Cboe and helped to expand its ETP listing and trading business.

“One of the areas that we have been working on is making sure fund issuers understand that we have the best technology of any exchange, that we focus on market quality for end investors, and offer exceptional service to issuers and their products from pre- through post-launch,” Morrison says.

Pre-launch support comes from the exchange’s ability to work with the SEC to obtain approvals, such as for the innovative product structures of semi-transparent ETFs and structured outcome ETFs, Morrison says. Post-launch, the exchange uses an approach heavily reliant on social media, particularly targeting users through LinkedIn and also working closely with issuers to execute on their strategic marketing and communications plans. In addition, Cboe provides continued assistance to issuers’ capital markets teams, including active surveillance on how their ETPs are trading and ongoing compliance guidance.

“We make sure that we add value,” she says. “It’s not a standard experience of the bell ringing.” The exchange does have a bell though, and its new Chicago headquarters will offer the iconic bell ringing as well, which is something Morrison looks forward to. “We will have that opportunity when we can gather again for our issuers to celebrate and have an experience that is unique to what our competitors offer.”

The firm also has a media outlet, through, which was acquired by Bats in April 2016. “It is unique for an exchange to own a media company,” she says. The firm is largely targeted at US registered investment advisers.

The options expertise within Cboe is also leveraged for potential ETF issuers. “We have unmatched industry knowledge and deep experience in the derivatives space and have been focused on educating end investors through Cboe’s Options Institute, which offers webinars on outcome ETFs and how FLEX options work.

“Because they are affordable and have the opportunity of reducing cost, outcome ETFs have the potential to challenge the annuity markets,” Morrison says, noting that the exchange is working with insurance companies who are becoming ETF issuers in this sector.

In Europe, Cboe operates trading venues in both London and Amsterdam for market participants impacted by Brexit. Morrison reports that the London exchange has 74 listings for ETFs and has also seen growth over the past year.

“What makes our offering unique is the connectivity to 18 different countries which reduces fragmentation across the marketplace,” Morrison says. “It allows an issuer to list in one place, rather than different countries, allowing trading to take place with all the broker-dealers across the 18 countries. This is a solution that we think will become the future of listing ETFs.”

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