Speaker 1:
Welcome to ETF Central, recorded here at the New York Stock Exchange, the home of ETFs. We're diving deep with the people shaping the space, the technologies driving innovation, and the stories behind the tickers. Whether you're an investor, issuer, or industry insider, welcome home.
Bilal Little:
Welcome to another edition of ETF Central. I'm your host, Bilal Little. I got to tell you, 2025 was a transformative year for the ETF business, and I have a special guest. I actually have my boss, and he's my business partner, Tim Reilly, who's head of ETFs at the New York Stock Exchange. We're going to cover the entire landscape, regulatory environment. We're going to talk about flows, and then we're going to talk about segments. We're going to end this particular segment talking about what he views as opportunities for 2026 when it comes to the ETF landscape. Tim, welcome to this show.
Tim Reilly:
It's great to be here.
Bilal Little:
Thank you for making time. I appreciate you.
Tim Reilly:
No worries at all.
Bilal Little:
Tim, I think it's important for any guests that ever come. I need them to tell their own background and story on sort of how they got on Wall Street and where they are now.
Tim Reilly:
Well, careers are never a straight line, but certainly I started out at Salomon Brothers, which no longer exists as a firm, but certainly is well known in the financial market's history. I started on the program trading desk there. We were eventually taken over by Citigroup, and I ended up being there for about 21 years.
I had the privilege inside Citigroup of building two businesses, or being on the team that built two businesses. We built the program trading desk in the '90s at Salomon Brothers into Citigroup. And then with another team, we built out the electronic trading business for the equity business, Citigroup, which were just incredible adventures to build new businesses, entrepreneurial businesses, inside an established company, a big bank.
So that was a lot of fun. It's great experience, wonderful people, great partners, good bosses. I spent some time over the next couple of years at two FinTech companies. Really enjoyed that experience, more entrepreneurial, more decision rights. And then I've been in the NYSE here for six and a half years, and about a year ago, I was asked to run the exchange traded solutions business, which includes closed-end funds, bonds, and of course, ETFs.
Bilal Little:
Tim, thanks for sharing that about your background, I think is really important. Look, 2025 has been a gangbuster year, global ETFs, well, US-based ETFs are now at 13.5 trillion or so. What have been some of the milestones at the New York Stock Exchange on the ETF side?
Tim Reilly:
Well, it's been a huge year and it's been a lot of fun. And we've been so lucky to have great partners, great market makers, issuers, regulators that have really helped us continue to lead. About 75% of the AUM that has come into the ETF market in 2025 has come through NYSE listed securities. So we continue to lead the way as a premier platform for ETF issuers when they want to come to the marketplace.
And what does that look like, right? So there's about 1.4 trillion that have come into the marketplace this year. That's a notable number. I think record-breaking is an overused term, but it's a second year of record-breaking inflows in the ETF history. I know we've led on crypto ETFs. We've led in the active space. We've had great collaboration with some of the marquee brand names. We had Baron Funds show up here on Monday and bring their ETFs to market. And we have more of that coming in the first quarter of next year.
So listen, there's so much innovation going on. There's so much energy going on in this space and we're here to help. So it's been a great run in 2025. I'm always cautious and motivated at the same time, so I hope it continues, but you never know. And so work harder, jump higher, keep moving.
Bilal Little:
When it comes to flows on the ETF side, talk a little bit about equity trading volume and what you're seeing there.
Tim Reilly:
Sure. Well, the NYSE group is far and away the number one trading venue for ETFs by every measurement assets under management share, et cetera. So that gives us a unique lens. It gives us ability to kind of understand the dynamics of different products, how they're trading. ETFs tend to trade more in the morning, at least the majority of them. And corporates are a little bit more heavily weighted towards closing auction at 4:00 at Eastern time every day.
But we work really tightly with our market makers and liquidity providers. We want to have those tight spreads, those quality auctions. Those experiences that when an ETF issuer lists with us, their products are in the marketplace and the retail investor, the individual investor, has a really good performance and experience with that. And that's consistency, durability, et cetera.
We also trade more ETF crypto volume than any platform, by far even more than we do on the ETF side. So we're really winning in that space, but it takes a lot of partnership, a lot of collaboration, and a lot of smart people doing smart things.
Bilal Little:
So you bring up an interesting point. Could you talk a little bit about trading volume? And I want to figure out what's going on in the dynamics on the ETF side.
Tim Reilly:
So ETFs can be from 25% of the volume to about 16%, 17% of the volume any day. Last March and April when we had the kind of tariff frenzy in US equity markets, ETFs were about 25% of the volume. Now what's interesting about ETFs is there's so many different kind of disciplines within them. So when you see a market selloff as kind of strong as we did in the first quarter and second quarter, the hedging utility of ETFs was really important. And now we've seen a rally, and not only are investors buying the Mag 7 and kind of other really high quality companies, but they're also buying kind of ETFs that are long only, that are bullish, that are kind of taking advantage of the upside.
So it's been a really interesting kind of framework as far as the overall marketplace. But the NYSE group, we are far and away the largest trading venue for ETFs in the United States and it's not even close. And actually, when you think about innovation and new products coming to the market, in crypto ETFs, we're even stronger. So in some cases, we trade multiples more of an ETF that's listed on another exchange.
Bilal Little:
Wow.
Tim Reilly:
And a lot of that's kind of our framework, our partners, our liquidity programs, our data relationships and our data infrastructure. But that's an interesting lens to have on the trading community and kind of how ETFs and really all securities are transacted.
Bilal Little:
Could you expand on some of that when you talk about the trading venue of the New York Stock Exchange? We have a substantial options business, right? Obviously the data side. Help sort of crystallize that picture for the viewers.
Tim Reilly:
Well, listen, the US has so many different places to trade. You can trade off exchange, on exchange, kind of all over the place. But the NYSE group of exchanges, we have five of them, but two that are kind of most active NYSE, and then NYSE Arca. And NYSE Arca is by far and away the number one listings venues for ETFs, which means we kind of manage the opening auction and the closing auction. I'll get a little bit more into that later, I hope.
So we're the starting and the ending of the day, it kind of happens on exchange with NYSE Arca. And then the NYSE is, we brought ETFs onto the trading floor about two and a half years ago, and that program has really taken off. We've actually seen a lot of activity in the fourth quarter, which is encouraging, exciting, and kind of sets up well for 2026, as there's so many products coming to the market. And at least for the first quarter, we expect that velocity to continue. And having that kind of portfolio of listings, options for a capital markets team, is an edge that we maintain and we kind of lean into.
Bilal Little:
Could you talk a little bit more about the floor listing and the benefits for why an issuer would want to list on the floor?
Tim Reilly:
Sure. NYSE Arca and really NYSE American are really where listings and trading of ETFs first started.
Bilal Little:
Okay.
Tim Reilly:
You go back to the SPY, the GLD, and some of those kind of early, early products, the VIPERS at Vanguard, the first iShares, things like Webs. There were all these kinds of first mover products in the ETF space. But they all kind of landed on NYSE Arca eventually before other exchanges kind of got into the game.
But about two and a half years ago, with the kind of breadth of products that are out there in the ETF space covering all kinds of asset classes, we introduced the ability to list on the floor. And the designated market maker program, which is a market making program for the NYSE proper, where Uber and Spotify and Nike and others are listed. That platform is a really unique model and a lot of it is around the strength, support and focus of the opening and closing auction and the liquidity coming out of the opening auction. And the activity going into the closing auction.
And listen, it's 2025, automation and data interaction and the kind of algorithmic models that operate all that, they're essential and they're important. And believe me on the New York Stock Exchange, they are the primary majority of how shares are executed. But having that extra set of hands instead of eyes, when supply demand is out of line, when there's less activity in a stock or an ETF, that creates an edge. That creates value that our issuers, both corporate and the ETF space really put a lot of value on. And so we launched ETFs into that model.
Bilal Little:
Okay.
Tim Reilly:
It doesn't fit for everything, but it fits for a lot of things.
Bilal Little:
So what you're talking about is connecting humans and technology and amplifying the value proposition for a client effectively on the floor.
Tim Reilly:
Well, I think there's strategy, security and kind of oversight that comes from having the flexibility to have human interaction and to kind of manage outlier situations or less active situations. Securities are traded high volume, high activity. Their liquidity management and the support and the capital that has to kind of support that quoting is probably less decisive than it is for something that's maybe isn't a traditional equity product, or is something that is kind of new to the marketplace.
And that's where those kinds of outlier situations and that security strategy and oversight of a human can be really helpful to the kind of liquidity picture, trading picture and the stability. We want to control volatility.
Bilal Little:
Of course. Of course.
Tim Reilly:
Investors and particularly newer investors who are less kind of accustomed to the kind of ups and downs of US equity markets, that stability, balance and control of a good marketplace. And we do that on NYSE Arca as well with our liquidity programs and support programs we do for our ETF issuers. But having those options to clients, to issuers, when they're launching a new product or a new innovation, we're privileged to be able to offer that.
Bilal Little:
No, it's good. What you're talking about is an extension of service, right? And ultimately that's value that you're trying to deliver. So I have a trading question now, because we have a large audience that they're retail investors as well, and they participate, and that's the beautiful part about market infrastructure today where more people can participate. There's a big question on the table about 24/7 trading.
Tim Reilly:
Yes.
Bilal Little:
Could you talk a little bit about what the NYSC is doing and sort of your views on that?
Tim Reilly:
Sure. Well, I'm going to correct you to start.
Bilal Little:
Okay.
Tim Reilly:
And you're asking the question, so I don't know why I'm turning them back at you. But I think where the industry's moving towards is 23.5.
Bilal Little:
Okay.
Tim Reilly:
And securities, it's one thing when it's the most active liquid securities. They have kind of a solid bid offer all day long and have a solid order book around them. But liquidity becomes concentrated. So 9:30 to 4:00 PM Eastern time is the current kind of core market hours. We're in the process of working with regulators, partners, other exchanges, retail brokers, and obviously legal and regulatory in a way that protects traders, investors, and institutions that are in these marketplaces.
But we're marching, working, collaborating to get the US equity market up and running 23 hours a day, five days a week. And many would ask, "why would you stop for an hour? That seems odd." But it actually is responsible, I think. Securities are companies or asset management products and they have dividends and stock splits and corporate actions and news and having the ability to kind of process adjust for spinoffs, et cetera. You need to close the market for an hour in order to accommodate all of that.
I'm sure over time there'll be other solutions to that. But one of the most important things about US capital markets is the integrity, the solid regulatory framework, the responsibility, the transparency. We have a really excellent capital markets infrastructure, kind of rule set and kind of operational excellence across all exchanges. Not that it's just a New York Stock Exchange. And that's important that we kind of sustain that.
And I think bringing that quality to investors outside of the US, outside of traditional core East Coast hours. I think bring that quality to a broader set of investors. And I think that's healthy for ETFs. I think it's healthy for corporates, but it has to be done in a measured and responsible way. And that's why you have 23 hours instead of 25, and that's why you have five days a week instead of seven days a week. I'm not saying over time it won't get there, it could, but we want to deliver to the standard of US capital markets and certainly the New York Stock Exchange, and we believe firmly in that.
Bilal Little:
No, that's a really strong point. So I want you to stay with this conversation in the theme of innovation.
Tim Reilly:
Sure.
Bilal Little:
What are you seeing from key innovative points over the last year, and what do you see going forward?
Tim Reilly:
Well, a lot of it is in product and there's so much energy in the digital asset space. You've seen the capital raise and the performance with the Solana coming to the market and the XRP products and some of the digital asset indices. So certainly that's in a place of using the ETF wrapper to introduce access to retail individual investors in some institutions through an ETF. So whether that's a munibond or it's a Bitcoin or it's a portfolio of commodities, but the way an individual investor can see a bid offer on their screen, buyers sell that security, own that security, share in the performance of that security.
And we see that in some cases leading into the private world. We've had private credit products in the ETF space that rolled out in 2025, and we'll see more of that. We're having some discussions and you can see kind of some of these private equity or private equity-like products coming into the ETF space. The ETF is not perfect for everything, because it operates in the framework of equity trading, equity markets and equity rules, but it is an access point and an opportunity point for investors and institutions. And we're going to continue to collaborate, to work with regulators, to work with marketers, and most importantly, to work with investors to kind of deliver those outcomes that they're looking for.
Bilal Little:
No, that's fantastic. It's very strong. I want you to talk a little bit about the regulatory environment and the shifts and changes that we've seen over the last year, and obviously what will continue to go into 2026.
Tim Reilly:
Yeah. I'd look at kind of three areas in that. One is improvements to auctions. So every day, US capital markets, US equity markets at 9:30 AM Eastern time is the marketing open, that's an auction. And at 4:00 PM Eastern time is a closing auction. Two largest liquidity points of the day. ETFs tend to trade a lot in the opening auction, in the early part of the day. Corporate securities, traditional securities, the Pfizers of the world, they trade, the Delta Air Lines of the world, et cetera, they trade more in their closing auction. And that's somewhat due to index structures and just kind of how kind of liquidity evolves over the day.
But we've made improvements on NYSE Arca as far as our in balance data, our auction framework, the information we put out to traders, investors, market makers. So we're getting more precision, more activity in our opening and closing auction. We made those changes in 2025, and we think we'll build on them going in next year. So one was the change in kind of transparency, process, reference pricing. I'm getting too technical for people who get really bored by my words. But we've really invested in making those auctions precise, transparent, valuable, and higher quality. And that's reflected and we're seeing increased activity, particularly in the opening auction over the last few months.
The second piece I would point to, as far as market structure was the SEC, as I said earlier, has been more constructive and collaborative in looking at generic listing standards, making it easier for ETFs to get to the market, not without the proper oversight, stewardship, et cetera.
Bilal Little:
Of course, of course.
Tim Reilly:
But whether it's a commodities-based index or a new digital asset that is kind of becoming more standardized and more kind of robust, it's made it easier to list those products. And then as investors, whether institutions, pensions, family offices, retail funds, or hedging strategies, they can get those to market.
So I think the change in listing standards, which now kind of moving into 2026 is going to extend into the multi-share class listing, which is a term that can be confusing to folks, but it basically means if you hold an investment in a traditional mutual fund and that mutual fund offers a ETF that is in that fund family, you can transfer your, or shift your ETF from, sorry, your mutual fund to an ETF. And it would be a frictionless transaction.
So the regulators are making it more accessible in the capital market space. And the third piece is sort of a small one that is a little bit nerdy in the marketplace, but it is affecting the ETF space specifically. And that is the definition of a round lot. So a round lot in trading standards, when you see the quote, 21 cents bid, 25 cents offered, it's reflected in 100 shares. So if it's 200 out there, 300 out there, 400 out here, that's kind of how it's represented on your screen, on your phone or what have you.
What's interesting about that and what the SEC saw was that, well, it's one thing if it's $25 stock and you have 100 shares out loud. What if it's VOO or SPY or GLD or some of these very high-priced securities? In order to kind of get the true market, the amount of capital that has 100 shares of a $600 or $500 stock or ETF is very different than a $25 one. So what they did was they redefined the round lot down to 40 or 70 shares. I don't want to get into the complexity of it. But if the stock price is over $250 the quote is different, meaning that it might be for 40 shares or 70 shares instead of 100 shares.
So spreads have come in. The cost of trading those higher price securities has gone down.
Bilal Little:
Which is a substantial benefit.
Tim Reilly:
Particularly for retail traders.
Bilal Little:
Retail traders, yeah.
Tim Reilly:
Because there's not a lot of retail traders are buying 10,000 shares of VOO. If they are, God bless them. But anyway, the ability to go in and buy a five lot on a smaller spread, on high-priced ETF, benefits the investor and is kind of good practice, good hygiene delivered by our regulators to investors. So those are really the three when I think about market structure that really influenced this year. And we're watching the dual share class space really closely going into next year and working with issuers that are deeply involved in that.
Bilal Little:
What are you most excited about looking ahead for 2026?
Tim Reilly:
Well, a lot of things. One is we have a great team here at the NYSE. And we've brought a couple new people on our team. We're working with a broader set of clients. We have more issuers, we have issuers like the Baron Funds that just came into the marketplace Monday after being kind of seen as a mark of excellence in the asset management community over the years, and we were able to list the majority of their funds on Monday via the ETF wrapper.
So I'm looking forward to new entrants. I'm looking forward to my team having the ability to reach out and work with more participants in the marketplace. I think that we saw a lot of activity in the fourth quarter. I want to see how that moves into next year. I'm excited about the marketing and distribution opportunities, because launching EDTF used to be, well, you get it out there, tell your story a little bit and hope, kind of, you build it and they will come, and wait for that organic growth. But when you're putting out a 1000 ETFs into the marketplace a year, that's not enough.
So we work really closely with our partners now on sales and distribution, how we can amplify their product, extend their marketing message. We can't be their marketing message. We're not a marketing company. But we work with so many good third-party partners. We work with media and content providers, and we truly try and kind of help them get their message out to the investment base. And we've seen a lot of success with that in 2025, and I'm looking forward to us extending that into next year.
But you can never predict the next year what it'll look like. It always feels like, well, it'll extend last year into next year. There will be surprises.
Bilal Little:
Yeah.
Tim Reilly:
There will be. But I feel like we're at the right platform here at the New York Stock Exchange to kind of adapt to those, adjust to them and take advantage of them on behalf of our clients. And that would be really cool.
Bilal Little:
So I want you to stay with this for one second just as we sort of come to a wrap on this. Any products stick out to you that are garnering a lot of attention or traction going into 2026? From a new listing perspective, what are you seeing?
Tim Reilly:
Well, a lot of it's in the income space, right? There's been a lot of success in the last two years in income.
Bilal Little:
Yeah.
Tim Reilly:
And whether that's in a fixed income structure, a derivatives structured, product structure, we've had tremendous momentum working with our options team in order to kind of bring that to the next level. There's other exchanges that have kind of done the baseline work and we congratulate them for that. But where this is going and expanding, we're really front and center.
We have a massive options trading business here at the New York Stock Exchange VR and NYC American and NYC Arca platforms. So I'm excited about that space. I think that more, as I said before, mutual fund companies like looking at non-traditional assets and alternative assets. I think the private equity space is coming strong to the ETF space or the closed-end fund space. The structures-
Bilal Little:
Do you think that you get a revitalization of like interval funds for that particular space?
Tim Reilly:
It is possible, right? Because it does fit into kind of what people are trying to accomplish, but not being anchored into the kind of create, redeem protocols, which can be difficult.
Bilal Little:
For sure. From a liquidity perspective, yeah.
Tim Reilly:
The end product isn't kind of callable in the same way. So I'd give it a serious, maybe. We're not having a lot of those conversations, but I didn't think we'd be having a lot of closed-end fun conversations in the second half of 2025 and we're having a lot of them.
Bilal Little:
You picked up. Yeah.
Tim Reilly:
But anyway, there's a lot going on. There's a lot of energy in the space. There's great people in this business and we're privileged and lucky to work with them. I'm excited about where the NYSE sits in the industry. But we're extremely motivated to kind of continue to outperform, to continue to lead, to work with regulators, to work with marketers, to work with trading operations, and really kind of deliver that robust kind of tail-to-tooth experience in the ETF space. And provide that to our clients so they can take advantage of the intellectual and thought leadership they have, the investment acumen they have, and their creativity in the product space.
And to be partnered with that and to be the preferred platform for the majority of those players in the industry is a wonderful place to be in. And it's about the team, it's about the people who work here and the people we work with. And the New York Stock Exchange has been around for a long time and seen a lot of things. And sometimes I say to people, "we've seen this before because we've seen a lot." And my earlier comment, we don't know what the market will bring next year, what the opportunities and the obstacles will be, but I think we're really well positioned to have the agility, the innovation, and really the kind of attitude to deliver in that environment. So I'm excited.
Bilal Little:
Yeah. Look, I don't think I'd do the conversation justice, as a leader in this business, of not asking you what concerns you going into 2026?
Tim Reilly:
Well, when I said before there were a 1000 new products, I think there were about 800 new ETFs a year before. I am not one to decide what's a good product and a bad product, but some of the products that are coming to market are maybe less developed, less mature. You see some products come to the market and they disappear six months later. And capital markets are volatile and some products go in and out of favor.
But I don't think we do the investment community, the trading community, the retail community, a wonderful service when we roll out products in the ETF space and then pull the plug on them four or five months later, because they're not successful. So I don't know the exact solution to that. We certainly have a tight ship around here on kind of regulatory oversight and product review before we'll list products. And our pure exchanges are disciplined about it as well, but still, you see these de-listings that happen too quickly and that troubles me.
Bilal Little:
All right. We're going to wrap up with one quick question.
Tim Reilly:
Oh, what do you got for me, Bilal?
Bilal Little:
What's your top song on your playlist right now?
Tim Reilly:
Well, I don't know when people watch this, but it's Christmastime, so it's got to be some Christmas song, but that's not where I'm going to go.
Bilal Little:
Okay.
Tim Reilly:
I kind of grew up in the '80s, '90s, really '90s, I guess. And I was a big Tom Petty fan, still am, may he rest in peace. But my favorite Tom Petty song is I Won't Back Down. And so if I just did my Spotify wrapped and I think it was number two behind some Noah Kahan song or something like that about trees in Vermont. But anyway, I appreciate the question and yeah, Tom Petty is my guy.
Bilal Little:
Thank you for joining ETF Central.
Tim Reilly:
I appreciate the time.
Speaker 1:
That's a wrap for today's conversation, but the ETF discussion doesn't stop here. For more insights, deep dives and voices shaping the market, stay connected on etfcentral.com. From the New York Stock Exchange, we'll see you next time.
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the information. Do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of light or clarity.