Looking at the technology side of ETF operations, one of the most important aspects includes the portfolio composition file or basket file – the electronic file is created after the net asset value is struck and is unique to ETFs. The file is used in ETF creation or redemptions, along with predicting stock splits, dividends and corporate actions.
As the industry adapts, new methods will be required. For instance, the industry has proposed non-transparent active ETFs, and the new structure could force service providers to create systems to accommodate the blind-trusts or NAV-based trading for the active ETFs.
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.