Barclays Drops Amex, Embraces NYSE/Archipelago
By Journal of Indexes Staff

In a major endorsement of the pending merger between the New York Stock Exchange (NYSE) and A rchipelago, Barclays Global Investors (BGI) says that it will transfer the primary listing for 81 iShares exchange traded funds (ETFs) fro m the American Stock Exchange (Amex) to the newly combined NYSE Group. The move will take place in stages over the next two years.

Trading volume was one of the key reasons BGI chose the combined NYSE/Archipelago. Archipelago leads the market with nearly 30 percent of ETF trading volume, and the NYSE's market share is rising. Archipelago attracted that volume thanks to its mar ketleading electronic trading platform. Interestingly, however, the NYSE's legacy specialist system helped seal the deal with BGI.

"(W)e found that customers are most comfortable with a situation where the ETF is listed on a market that does have a dedicated market m a ker or specialist," says Lee Kranefuss, head of BGI's ETF effort.

That must have been music to the NYSE's ears, which has been pitching the unique powers of its hybrid electronic/specialist system for years.

The news is a stunning blow to the Amex. The 81 iShares represented almost half the Amex's 164 ETF listings, and many experts had expected ETFs to play a key revitalizing the sagging Amex-a position Amex says still holds true.

"We ' re more than just a listing venue," says Cliff Weber, senior vice p re s i d e n t of the ETF Marketplace at Amex. "We are really a partner to our issuers in helping them bring new p roducts to market, and in working to expand the ETF category in new directions . That's not going to change."

The Amex has a number of new ETFs in the pipeline: most famously actively managed ETFs, which could potentially be a boon to the industry, as well as other innovative, category changing products.