Intercontinental Exchange Inc., the owner of the New York Stock Exchange and some of the world's biggest futures markets, has the booming business of bond exchange-traded funds in its sights.
“We're aggressive and we're interested in this space and so we're able to move quickly,” Jeffrey Sprecher, the chairman and chief executive officer of ICE, said in a conference call Wednesday to discuss the Atlanta-based company's quarterly results. “It's going to be a growth area for us.”
Assets in fixed-income ETFs have exploded, increasing 380% since January 2010 to almost $584 billion as of July 20, according to a recent report from Bloomberg Intelligence. More than half of the net amount of money flowing into U.S. ETFs this year through Aug. 2 has been invested in fixed-income products, according to data compiled by Bloomberg.
Companies that sponsor the funds “are incredibly bullish on the demand for fixed-income ETFs,” Mr. Sprecher said, adding that “there's tremendous interest by sponsors in that arena to talk to us about what we can do.”
Mr. Sprecher said his company can offer a package of services to ETF providers. It can develop or replace indexes they're based on, provide the data, do the calculations and list the products, he said. Bloomberg LP, the parent of this news organization, competes with ICE in providing data on bond prices.
A key feature proponents cite: Bonds can be too hard to trade, and wrapping them up in ETFs helps ease that.
“I think the success of fixed-income ETFs really shows you how hungry investors were for some sort of electronic exchange for bonds,” said Eric Balchunas, ETF analyst for Bloomberg Intelligence. “They've made bonds in a sense trade like stocks.”
