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12.03.2009

The Eye for ETFs

Exchange Traded Funds are very attractive owing to their basic stock-like flexibility. But without the ability to compute their indicative net asset value, they could not live up to their name. We have designed a tool that is even deployed in the USA.

In the investment business, Exchange Traded Funds hold a special position, because like any regular stock, they are continually being traded. Keeping track of an ETF value is critical, hence the importance of our tool. Every 15 seconds, it kicks in to compute the indicative net value (iNAV) of ETFs. A whole host of individuals need the iNAV: the market makers use it to ascertain the right bid and asked prices; the stock market in question needs it anyway; institutional investors use it to pursue possibilities for arbitrage and, to come full circle, the private investors can use it to assess the quality of the market maker’s values.

We have been the supplier of computational software ever since ETFs have been traded in Switzerland. Originally developed for UBS Exchange Traded Funds, the system is now deployed in the USA. At the present time, no fewer than 33 ETFs traded on the NYSE Amex (ex Amex) are calculated using the application. NYSE Amex computes domestic funds itself. The tool could only be partially deployed for ETFs with international shares. Thanks to the complete, international ETF computation service offered by Rolotec and SIX Telekurs in the USA, market participants now have a new option for calculating the indicative intraday value of their international funds.

The Rolotec tool and the SIX Telekurs data feed allow emitters to quickly activate new ETFs. The application of the tool is not limited to ETFs, however. The calculation mechanism also works with entirely customizable indices, which benefits fund managers and investment bankers. So we actually are calculating 17 indices for Russell Investments USA. Theoretically, indices can also be computed using values that are not listed on the stock exchange. This type of flexibility also means that medium-sized or smaller asset management firms would be able to perform portfolio calculations with limit alarms at affordable conditions.

Verfasst von Hans Fischer um 12.03.09 14:26