What is COSMOS and how does it work?

COSMOS is the platform that makes everything about ETF creations and redemptions easier. 

It provides a system for banks, ETF issuers and market makers to create and redeem ETFs, as might be standard. But it does more than just that.

More importantly, it includes an Order Management System that allows parties to negotiate the price, slippage and specific terms on ETF orders. An example of the interfaces is shown in the image below: 

To ensure that billions of dollars of ETF orders are kept error-free and accurate, COSMOS includes safeguards like maker/checker and error notification flagging. These keep every stage of the transaction – receipt, approval, pricing, settlement – smoother and safer for everyone, reducing the risk of fat finger trades. This is pictured in the screenshot below:

COSMOS ties into our portfolio composition file (PCF) service. The two working together to allow ULTUMUS to automate ETF primary market activity.

Why was COSMOS built?

COSMOS was built on request from an ETF issuer. They requested it because currently there is no standardised ETF creation redemption process, software or system. Instead, most ETF issuers have bespoke portals for creating and redeeming ETFs. When a new ETF issuer launches, they often build one from scratch. These bespoke portals are sometimes missing features, meaning fund administrators must process ETF orders manually.

In this setting, some parties are still using legacy technology, such as fax machines and emails. While “working it out in a spreadsheet” remains a common way that billions of dollars worth of ETF orders are reconciled and trades are matched every day. The problem is particularly acute in Europe, where the often-complex UCITS share class structure means smaller ETF orders – such as switches between currency hedged and unhedged share classes – are cumbersome and performed manually.

COSMOS – which is built on AWS and distributed via the cloud – standardises all this by bringing ETF creation redemption under a common and shared system that is easy to use. It also brings cutting-edge technology to the fragmented and sometimes antiquated universe of ETF creation redemption. 

Whose problems does it solve?

COSMOS is for companies directly involved in ETF creations and redemptions. Types of companies that find COSMOS valuable include: 

• ETF issuers
• Custodians
• Fund Administrators 
• Authorised Participants
• Market Makers

Ultimately, COSMOS is designed to help everyone involved in ETF creation redemption. It is customisable, so it can be configured to meet the specific needs of each of these groups.

What benefits should COSMOS users expect to see?

Clients of COSMOS can expect several key benefits:

• Labour saving: COSMOS, as software, automates a lot of manual work.
• Better data management: COSMOS and ULTUMUS centralise ETF data, ensuring nothing gets lost or misplaced.
• Increased Straight-Through Processing rates: COSMOS helps fund administrators process ETF orders automatically, alongside their mutual fund orders, leading to quicker results.
• More accuracy and compliance: COSMOS ensures precise order processing, aiding regulatory compliance.
• Transparency: Every step in the order-chain is fully auditable on COSMOS.
• Reporting: COSMOS includes event notification and time-based smart reporting ‘out of the box’.
• Global 24x5 support: Clients benefit from ULTUMUS's global support network, providing expert assistance across all time zones.

What do you need to implement COSMOS?

To implement COSMOS, companies must be onboarded by ULTUMUS. We set up the base configuration and then work with our clients to determine who gets permissions; what ETFs will be created and redeemed; specific requirements for each ETF; how clients would like workflow to operate.

Clients can connect to COSMOS through direct logins, and everything is supported by APIs and FTPs. ULTUMUS offers a testing environment where clients can check and validate data, with real-time updates for accurate results. With our global offices we provide 24x5 support.