The ETF Hub from US exchange group ICE will now allow participants to assemble custom baskets for exchange-traded funds (ETFs) in a bid to boost liquidity and tighten bid-ask spreads.
The move means ICE ETF Hub users can screen, communicate, and assemble custom baskets with issuers electronically, via FIX-enabled APIs and front-end user interfaces of the hub.
To accustom participants to the new technology, ICE ETF Hub will launch a pilot program allowing customers to test the custom basket negotiation in a live setting. Market makers including Jane Street, Old Mission, CTC, and others have already enrolled in the program and ICE ETF has said it expects others to follow in the coming months.
“Assembling and placing custom creation and redemption baskets — all in a systematic way — has been our vision for the platform since we started exploring ways to automate the ETF primary market,” said head of the ICE ETF Hub Peter Borstelmann. “With this new functionality, we are introducing an innovative solution that enables market participants to deploy custom basket workflow in a more efficient and expeditious way.”
The ICE ETF Hub which was established last year has already had several major institutions become authorized participants in recent months including; Goldman Sachs, JP Morgan, Bank of America, Citadel Securities, and Virtu Financial.
In February this year, ICE confirmed the addition of a FIX API to allow authorized participants to connect to the ETF Hub to manage create and redeem orders. Multi-order functionality was also rolled out so that multiple transactions to be submitted as one order.