US exchange group ICE has said it saw record volumes from clients using its exchange traded fund (ETF) ecosystem during February, with fixed income ETFs driving the bulk of the activity.
Authorised participants processed a record $27 billion in notional value through the ICE ETF Hub in February, up 21% from the previous month. Of that, $6.6 billion was for equities, while a significant $20.5 billion was fixed income.
“As we continue to build out the ICE ETF Hub platform through the addition of new functionality and the introduction of new efficiencies to the ETF primary market, we’re pleased to see continued growth and adoption from the ETF community,” said Peter Borstelmann, head of ICE ETF Hub.
The record follows confirmation earlier this month that Goldman Sachs had become the latest major institution to sign up as an authorised participant on the platform. JP Morgan, Bank of America, Citadel Securities and Virtu Financial were among the first to join the ICE ETF Hub.
Founded last year, ICE ETF Hub aims to support the ongoing growth of ETFs for issuers, authorised participants, market makers and custodians. Users can assemble and place create/redemption baskets automatically and through more standardised means. The ecosystem supports US-listed domestic equity and fixed income ETFs, but ICE plans to expand this later in the year to support US-listed international equity ETFs. It will also provide connectivity to ICE Bonds trading protocols, including click-to-trade and request for quote.
ETFs have grown significantly in recent years as an important investment vehicle, with fixed income ETFs the most rapidly growing segment of the market. Increased adoption of index trading is considered the biggest driver in the growth of bond ETFs, which are increasingly used by a range of investors for different purposes in portfolios. In some instances, they are adopted as building block exposures at the core of portfolios or as more tactical trading vehicles for the implementation of asset allocation decisions.
“We have seen an increased use of technology in fixed income, and the introduction of equity-like trading plays to the strengths of bond ETFs,” Brett Pybus, head of iShares EMEA fixed income strategy at BlackRock, previously told The TRADE. “This is because they provide a very efficient way for buyers and sellers to trade without having to go through traditional dealers. They also provide transparency in a typically opaque bond market to clients by offering a window into where different bond exposures are trading.”