The Intricate Framework and Interplay of the Key Functions Essential in Launching an ETF
Given the highly specialized nature of ETFs, newcomers eyeing the ETF space, including those who manage mutual fund or SMA offerings, might face a challenging task when it comes to launching and managing an ETF
Building an ETF, let alone a family of ETFs, from the ground up is an incredibly complex process that requires numerous teams to work in harmony to avoid unexpected delays and unnecessary expenses.
Though not an exhaustive inventory, this preliminary rundown spotlights vital pieces involved in the creation process of an ETF:
Legal & Regulatory
Contracts, compliance, fund trust structures, independent board oversight, regulatory filings and more must all be handled deftly from the fund idea stage and beyond.
Capital Markets
Vetting potential exchange partners, managing the exchange listing process, upholding relationships with Authorized Participants and Lead Market Makers to support ongoing liquidity of the fund.
Portfolio Management
The trading and portfolio management services that include pre-trade compliance, portfolio optimization and/or replication, basket creation, tax efficiencies, and rebalancing.
Board & Trust
Provide the essential oversight needed of the fund and fund family.
Marketing
A multi-channel approach involving branding, content, public relations, digital marketing, and social media is a must for helping a fund stand out (also a must: maintaining regulatory compliance).
Website & Compliance
Fund website development and maintenance services that adhere to specific and prompt regulatory compliance criteria related to transparency, disclosures, and ease of access must be available each trading day.
Fund Services
The day-to-day administration, fund custody, distribution, accounting, reporting, and more that requires highly specialized expertise.
Building and running an ETF relies heavily on deep industry experience. That level of complexity can be daunting for potential new entrants to the ETF space, even those that may have already built robust mutual fund or SMA lineups, given the highly specialized nature of ETFs.
At ETC, we pride ourselves on being able to bring together all of the various job functions above, as well as many others, to build bespoke strategies, products, and structures that serve as the foundation for ETF growth. With the right partner, all of this complexity becomes interconnectedness and the path forward to filing, launch, and beyond becomes that much clearer.
ETC works with firms of all sizes to develop and implement innovative strategies, contact us today to talk all things ETFs.
