AMEX Beefs Up ETF Development


The American Stock Exchange (AMEX) today announced the creation of a new business unit that will specialize in ETF development to leverage its position as a global leader in exchange-traded funds (ETFs). AMEX was instrumental in the development and subsequent rapid expansion of ETFs.

The first U.S. ETF began trading on AMEX in January of 1993. It was the culmination of years of development, regulatory hurdles, perseverance, and a little luck. Years before the launch of the SPDR Trust Series (SPY), or "Spiders," Nate Most had the seeds of an idea for a new financial instrument. He worked in new product development on the derivatives side of AMEX, and had a background in commodities. He also called on his scientific nature - Most was initially a physicist and engineer specializing in acoustics - when he put together the basic design of a new product that would go on to change the way many people invest: the exchange-traded fund. Nowadays, Nate Most is chairman of the board for the iShares Trust at Barclays Global Investors.

Just over eight years later, 103 ETFs trade on AMEX. Total assets for all AMEX-listed ETFs are at $80 billion and rising, and the average daily composite volume of AMEX-listed ETFs is 91 million shares. Additionally, AMEX has partnered with the Singapore Exchange, Euronext, and the Tokyo Stock Exchange to cross-list domestic and international ETFs.

We caught up with the newly-appointed head of AMEX ETF Services, Robert S. Tull, to briefly chat about AMEX's plan for the future of ETFs. Mr. Tull previously worked at Deutsche Bank and Morgan Stanley, where he assisted in ETF development.

IndexFunds: Would it be fair to say AMEX played a more active role in ETF development in the early stages with the SPDRs, then backed off and let fund managers develop their own products, and is again taking an active role with today's announcement?

Tull: The ETF marketplace is expanding, particularly with the number of firms getting involved. From our perspective as an exchange, it's beneficial for us to facilitate the growth of the market as new types of ETFs are introduced, including enhanced, leveraged, and even active. People are going to be looking for resources to facilitate that growth.

IF: What are the short-term goals for your new team?

Tull: The short-term goals are simple. Our group was created to respond to client demand, which includes potential issuers, and the service provider community with clients who want to issue ETFs but don't know the process to get them launched. There's also new service providers who will enter the arena as new types of ETFs come to market.

IF: How do you respond to the New York Stock Exchange listing the three most popular ETFs that trade on AMEX?

Tull: AMEX chairman and CEO Salvatore Sodano said it best when he remarked that it's a compliment to how far AMEX has come with ETFs.