Bank of America Merrill Lynch Introduces a Premium ETF Algorithm for Client Use

NEW YORK--(BUSINESS WIRE)-- As popularity of ETF products grows so does the need for more sophisticated trading tools. In recognition of this, Bank of America Merrill Lynch today unveiled its premium algorithm, ETF-aX. This new ETF-specific algorithm analyzes market depth and price data across an ETF’s underlying portfolio to identify the most efficient combination of ETF, stock, and futures and then automatically trades them to source liquidity and find the best prices.

“The primary challenge with trading ETFs is market fragmentation; liquidity is limited outside of the top-ranked ETFs,” said Charlie Whitlock, an execution consultant at BofA Merrill. “By using ETF-aX, clients are able to leverage our in-house ability to trade a combination of the component parts in different markets, gaining liquidity at more efficient pricing.”

Upon receiving a client’s order to trade an ETF, the engine analyzes inside pricing and depth of book across the ETF, stock, and futures markets to compile a picture of available liquidity. Once ETF-aX determines the optimal way to transact, balancing a desire for the best pricing against a need to capture the most liquidity, slices are simultaneously sent out to all market centers. A composite ETF price is assembled from the different executions and provided to clients.

“This technology has a proven and successful track record within our high-touch business,” said Michael J. Lynch, head of Americas Execution Services. “It’s a premium product that we think our electronic clients can greatly benefit from once integrated into their algo trading suite.”

Bank of America Merrill Lynch is a leading global provider of equity and options trading, sales and research services to mutual funds, hedge funds, broker-dealers, pensions, endowments and other institutions. Its award-winning algorithmic trading platform was ranked as one of the top three providers of algorithmic trading, ⁽¹⁾ and as having one of the top three market share positions of daily global algorithmic trading volumes in 2009. ⁽²⁾ Bank of America Merrill Lynch is also ranked No. 2 in the World’s Best Broker by Bloomberg Markets. ⁽³⁾

Bank of America

Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 57 million consumer and small business relationships with 5,900 retail banking offices, more than 18,000 ATMs and award-winning online banking with 29 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Banc of America Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, which are both registered broker-dealers and members of FINRA and SIPC, and, in other jurisdictions, locally registered entities. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed.

Copyright 2010 Bank of America Corporation. All rights reserved. Bank of America, Merrill Lynch, Broadcort and their logos are trademarks of Bank of America Corporation and/or its affiliates.

1. The Trade – 2010 Algorithmic Trading Awards (Jan 2010)

2. TABB Group – U.S. Institutional Equity Trading 2009/10: Dark Pools, Transparency and Consequences Report (Nov 2009)

3. Bloomberg Markets, The World’s Best Broker Rankings (Jan 2010)

www.bankofamerica.com

CONTACT:

Reporters May Contact:
Kerrie McHugh, Bank of America Merrill Lynch, 1.646.855.3375
kerrie.mchugh@bankofamerica.com

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