Ultimate Guide to Managing ETF Data

Operational Functions

ETF operational models have historically been fragmented and disparate, but are increasingly adopting models summed up by acronyms such as STP (Straight Through Processing), LPO (Lean Process Optimisation), RPA (Robotic Process Automation), and using SaaS (Software as a Service).

Regulatory Functions

ETFs need to comply with a wide range of financial, securities, tax, and other regulations. Examples include European Market Infrastructure Regulation (EMIR) in the EU, and Foreign Account Tax Compliance Act (FATCA), which is a US regulation that can be extraterritorial in scope.

Marketing Functions

Marketing can be done in house by ETF issuers, or it may be left to distributors. Social media literature, podcasts, and videos promoting ETFs need to pay careful attention to regulation and compliance in the relevant jurisdictions.

Outsourcing ETF Functions

Most ETF issuers will outsource to varying degrees, in areas such as settlement, custody, securities services, fund accounting, proxy voting, valuation, and security lending. Even when ETF issuers do some of these things under a common top level corporate umbrella, there could be several corporate sub-entities carrying out different functions.

ESG Scores

ESG scores and categories can involve global standards, such as UNPRI (United Nations Principles for Responsible Investment), or may be specific to geographic regions. For instance, in the EU, some ETFs are making disclosures under articles 6, 8 or 9 of the SFDR (Sustainable Finance Disclosure Regime) while others may even opt out of the SFDR.There are also numerical rankings from groups such as MSCI. 

Corporate Action Feeds

A comprehensive, global and dynamically updated corporate action feed should capture and account for all corporate actions from M&A to spin offs, rights issues and other offerings, cash and scrip dividends, index additions, deletions and rebalancings, and other items.

Index Aggregation

Most ETFs are designed to track an index. They need a license to do so and they also need to track its price and constituent weightings accurately in real time during market hours. ULTUMUS offers a managed data index service that gathers data from over 400 index providers from the household name giants to a growing variety of niche index providers. 

Fixed Income Reference Data

Fixed income reference data is more complicated than equity reference data as there are so many more instruments which change more often. There are millions of actively traded fixed income instruments listed on over 100 markets, which can include exchanges as well as other sorts of trading venues since some of these markets are still mainly over the counter (OTC).