(This article first appeared on LinkedIn.)
By Douglas Yones, Head of Exchange Traded Products at NYSE
In the midst of a historic year for financial markets, the New York Stock Exchange ETF Team has remained focused on establishing a robust liquidity platform to accommodate the growth of active, semi-transparent ETFs. Today represents the next step in growth for the investment management industry, as the NYSE’s Actively Managed Solution (NYSE AMS) joins the marketplace of available solutions, with two new ETFs from American Century going live on NYSE Arca.
These launches come shortly after the NYSE Group received SEC approval for new rules allowing asset managers to list their actively managed ETFs on NYSE Arca using the NYSE AMS methodology without the requirement to disclose daily holdings. Historically, this disclosure requirement has precluded active managers from entering the ETF space due to the risk of exposing a portfolio’s daily strategy, alongside concerns of front-running trades. With the NYSE’s proxy-based solution, active managers can now launch ETFs that protect their intellectual property while accessing a reduced-cost infrastructure, increased tax efficiency and global distribution capabilities. We foresee this unlocking a historic growth opportunity for the ETF marketplace.
The NYSE methodology uses a best-in-class proxy portfolio solution provided by Qontigo, which allows market participants to effectively trade active ETFs at or close to NAV without a daily holdings disclosure. As the operator of the premier global ETF exchange, the NYSE is committed to supporting listings for all active, semi-transparent methodologies, including those from Precidian Investments, Fidelity Investments, Blue Tractor Group and T. Rowe Price.
This latest milestone is the culmination of nearly two decades of industry-wide efforts to give asset managers the flexibility to provide investors expanded access to active management in an ETF wrapper. As the Home of ETFs, the NYSE looks forward to ushering in this new, exciting chapter for the industry.
Contacts us at ETF@NYSE.com for support in launching your actively managed ETF business.