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Wednesday, April 1, 2015

Nasdaq Fund Network #2015 - 3
UPDATED 5/29/2015: Nasdaq Releases MFQS Specification Updates for Exchange Traded Managed Funds (ETMFs)

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Interfaces Impacted:

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What you need to know:

  • Nasdaq® will soon introduce Exchange Traded Managed Funds (ETMFs) as a new exchange-listed asset class.
  • Nasdaq will trade ETMFs using a NAV-based trading model, as outlined in the SEC Approval Order.
  • ETMFs are expected to report daily net asset value (NAV) via MFQS system.
  • Nasdaq will offer two Saturday user acceptance tests on August 15, 2015 and September 12, 2015, for MFQS only.

Updated 5/29/2015: Nasdaq updated this notice to reflect MFQS ETMF symbology changes requested by the market data community. Nasdaq also added UAT dates for the ETMF release.

What is changing?

Nasdaq will add ETMFs to the Mutual Fund Quotation Service (MFQS) in Fall 2015. Nasdaq will trade ETMFs using a NAV-based trading model as outlined in the SEC Approval Order. ETMFs are expected to report daily net asset value (NAV) via the MFQS system.

What is an ETMF?

Approved by the SEC in November 2014, ETMFs are a new type of investment vehicle, combining features of open-end mutual funds and exchange-traded funds (ETFs). ETMFs will support actively managed investment strategies, while offering the performance advantages and tax efficiencies of ETFs.

Nasdaq is working with Navigate Fund Solutions (NFS) on the ETMF initiative. At time of launch, Nasdaq expects ETMFs will carry the NFS brand "NextShares" in the instrument name. For more information, please visit the NextShares website at www.nextshares.com.

How will ETMFs be supported on MFQS?

MFQS pricing agents will be able to report ETMF values with the existing MFQS 0050 message formats defined for MFQS CTCI, MFQS Web Batch Upload or MFQS FTP Server interfaces. ETMFs can be reported using the same MFQS 0050 message formats as used by mutual funds, annuities, unit investment trusts (UITs) and structured products.

Nasdaq will add new Instrument Type and Instrument Code values to the MFQS interface specifications for firms looking to report ETMFs via MFQS. The new values will be:

  • Instrument Type: Nasdaq will add a new value of "EM" to MFQS file formats for web batch upload as well as MFQS web-based reports. No impact to MFQS CTCI.
  • Instrument Code: Nasdaq will add a new Instrument Code value of "Q" for ETMF / NextShares on MFQS web-based reports. No impact to inbound MFQS interfaces

Please note that MFQS issuers and pricing agents only need to code for the field values if they wish to report ETMFs. There will be no impact to firms' reporting of existing MFQS asset classes.

What is the proposed MFQS symbology for ETMFs?

ETMFs will use a different symbology standard than other MFQS asset classes. Based on industry feedback, Nasdaq will assign a 7-character MFQS symbol with no delimiter for ETMF NAV reporting. The MFQS symbol will begin with the listing exchange ticker symbol and end with characters “NX”. If, for example, the ETMF had an exchange listing ticker of "ETMFC", the MFQS symbol for NAV reporting would be "ETMFCNX".

When will Nasdaq offer testing opportunities for MFQS pricing agents?

Nasdaq will offer two Saturday user acceptance tests (UATs) for MFQS issuers, pricing agents and market data vendors on:

  • Saturday, August 15, 2015
  • Saturday, September 12, 2015

UATs are scheduled to run from 9:00 A.M. to 12:00 P.M. ET. Firms wishing to participate in the UAT should complete and submit the MFQS testing registration form to Nasdaq Mutual Fund Operations by the Thursday before the scheduled test date.

Where can I find details on Nasdaq data feed format changes?

Nasdaq has outlined its proprietary data feed changes for ETMFs in Data Technical News #2015 - 7.

Where can I find additional information?


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