Education
- How do ETFs work?
- ETPedia
- Introduction to Money Market Funds
- Guide to the Canadian ETF Industry
- ETF Tax Efficiency 101
- REITs
XFT
The Money Market
| Instrument | Principal Borrowers |
|---|---|
| Federal Funds | Banks |
| Discount Window | Banks |
| Negotiable Certificates of Deposit (CDs) | Banks |
| Eurodollar Time Deposits and CDs | Banks |
| Repurchase Agreements | Securities dealers, banks, nonfinancial corporations, governments (principal participants) |
| Treasury Bills | U.S. government |
| Municipal Notes | State and local governments |
| Commercial Paper | Nonfinancial and financial businesses |
| Bankers Acceptances | Nonfinancial and financial businesses |
| Government-Sponsored Enterprise Securities | Farm Credit System, Federal Home Loan Bank System, Federal National Mortgage Association |
| Shares in Money Market Instruments | Money market funds, local government investment pools, short-term investment funds |
| Futures Contracts | Dealers, banks (principal users) |
| Futures Options | Dealers, banks (principal users) |
| Swaps | Banks (principal dealers) |
Canada
| Who | Does What |
|---|---|
| Investment Process | |
| ETF Provider/Portfolio Manager | Overall responsibility for providing legal, business, and financial support services to enable the ETF to operate as an ongoing entity. Informs the custodian about trades and the contents of the creation/redemption basket. |
| Custodian | Provides safekeeping of the ETF portfolio’s assets; generates an aggregate overview of the portfolio; records asset ownership. |
| ETF Provider & Accounting/Custody | Work together to process and settle creation/redemption activity when orders are made and processed. |
| Designated Broker (DB)/Designated Market Maker (DM) | Places primary orders via an order portal. They are approved by the ETF provider. Once approved, the ending NAV is used to value the order and the ETF service provider (or Transfer Agent depending on the situation) will send a confirmation to the DB/DM, ETF provider/manager, custody and accounting to identify which securities (if any) need to be delivered in kind in exchange for ETF units or how much cash should be delivered in exchange for ETF units (when there is a creation). |
| Fund Administrator | Processes the creation basket. Responsible for calculating the daily iNAV. Responsible for valuation of the ETF resulting in the NAV to value and primary market orders. Also provides the projected NAV used to create the basket and possibly the PCF file. |
| Transfer Agent-Registrar | Processes the ETF shares. Responsible for creating and cancelling ETF units and processing ETF corporate actions. |
| Compliance (Auditors and Lawyers) | Monitors the ETF provider and its individual ETFs for compliance with regulations, policies, and procedures. Supports management functions requiring accounting and legal expertise. |
| Sub-Advisor | An external party or organization that may be retained by an ETF provider to manage some, or all, of the portfolio’s assets because of specific expertise in a specific strategy. |
| Independent Review Committee (IRC) | A committee of at least three independent (external) members that each ETF provider must have to provide oversight of its funds and to monitor for conflicts of interest, etc. |
| Stock Exchange Staff | Administer ETF processing in the secondary markets. |
| Canadian Depository for Securities (CDS) | The national securities depository, clearing, and settlement hub for the equity, fixed income, and money markets. |
| Investment Brokers and Financial Advisors/Online Brokers | Work with individual investors to buy/sell ETFs; provide advice and places orders on their behalf. Online brokers typically provide execution services but not advice. |
| Support Services | |
| Index Provider | Delivers daily index constituents to the ETF provider for the purpose of tracking the portfolio, i.e., the basis for the ETF's investments. Examples of such providers include: FTSE Russell, MSCI, S&P, etc. |
| Data Vendors | Provide the ETF provider and its service suppliers with information about securities pricing, markets, website analytics, etc. |
| Sales Team | Representative liaison with investment brokers/advisors and or directly with the investor depending on the business model. |
| Marketing Team | Develop education and marketing campaigns and messaging strategy for shaping an ETF’s branding and for promoting the ETF provider and its funds to advisors and investors. |
| Regulatory Oversight | |
| Canadian Securities Administrators (CSA) and Provincial Securities Commissions | Coordinating body of Canada’s 13 provincial and territorial securities regulators which seeks to harmonize regulation of the Canadian capital markets, including oversight of ETFs. |
| Investment Industry Regulatory Organization of Canada (IIROC) | Licenses, regulates, and provides oversight of the conduct of securities-licensed brokers who sell ETFs and the Exchanges. |
| Mutual Fund Dealers Association of Canada (MFDA) | Licenses, regulates, and provides oversight of the conduct of mutual fund-licensed advisors who sell ETFs. |
Canada
| Time Period | Activities |
|---|---|
| T -1 (One day before an ETF order) |
• Valuation agent finalizes Net Asset Value (NAV) for T (Trade date). • Portfolio Manager identifies pending trade/rebalance activity. • Valuation agent/ETF Administrator books all portfolio activity and accruals for T+1 (the day after the Trading date) for previous portfolio trades. • ETF Administrator creates ETF basket/PCF and shares this information with related parties: the Canadian Depository for Securities (CDS) (and the National Securities Clearing Corporation (NSCC) in the U.S. if applicable). |
| T (Trade or Order date) |
• Designated Broker places creation or redemption order with the fund company (directly or through ETF administrator) indicating how many creation units (PNUs) they would like to transact. • Valuation agent finalizes the NAV to T and provides to the ETF administrator. • ETF Administrator uses the NAV to price the total value of the ETF order, the value of any in-kind positions being transacted and any associated cash. The Administrator confirms the details to all affected parties. |
| T +2 (Settlement Two days after an ETF order) |
Creations: • Transfer Agent delivers ETF shares to Custodian. • In-kind trades (Canada): - Designated Broker delivers all in-kind positions to Custodian - Custodian delivers ETF shares to the Designated Broker and receives any associated cash. • In-kind trades (U.S.): - Custodian delivers ETF shares to Authorized Participant and receives all in-kind positions, collateral for short positions and any associated cash. Redemptions: • Designated Broker/Authorized Participant delivers ETF shares to the Custodian and receives all-kind positions and associated cash. • Custodian delivers ETF shares to the Transfer Agent for cancellation. |
KYA (Know-Your-Asset)
| Token representing | 1 year Treasury Bond |
|---|---|
| Blockchain | Polygon |
| Token address | 0xf4D2...045f |
| Token standard | SX1411 |
| KYA version | 1 |
| Token version | 2 |
| Asset type | Bond token |
| Redemption asset ticker | USDC |
| Redemption asset blockchain | Polygon |
| Redemption asset | 0x2791...4174 |
| Issuer | 0x1a0f...0C00 |
| Issuer name | SwarmX GmbH |
| Issuer URL | SwarmX GmbH Documentation |
| Guardian address | 0x024A...9Fa8 |
| Guardian name | Swarm Markets GmbH |
| Guardian URL | Swarm Markets GmbH |
| Agent address | 0x1a0f...0C00 |
| Agent name | Swarm Markets GmbH |
| Agent URL | Swarm Markets GmbH |
| Custodian name | Volksbank Mittweida eG |
| Custodian URL | Volksbank Mittweida eG |
| KYA (Know-Your-Asset) | ipfs://QmYD5tu9XTdkrbb9TLK7vzYVx4JgFN8SxJXeghjKPW7egB |