NEW YORK, July 15, 2020 – Qontigo announced today that the New York Stock Exchange (NYSE) has deployed Qontigo’s best-in-class proxy portfolio solution to enable the launch of the first actively managed, semi-transparent ETFs on NYSE Arca. The NYSE’s Actively Managed Solution (NYSE AMS) integrates a proprietary version of the Axioma Portfolio OptimizerTM and employs Axioma Factor Risk Models to generate a proxy basket that tracks intraday performance of the fund, but with different composition and weightings than the fund’s actual holdings. Using this proxy portfolio, market participants can effectively trade active ETFs at or close to net asset value (NAV) without a fully transparent daily holdings disclosure. This innovative solution marks NYSE’s entrance into the new and rapidly growing category of actively managed, semi-transparent ETFs.
“Our successful collaboration with the New York Stock Exchange has produced a solution that enables the investment-management community to expand into this new and highly attractive category of investment products. With actively managed ETFs, investment managers are able to preserve their proprietary knowledge and methodologies, while benefiting from the liquidity and infrastructure offered by an exchange-traded product.”Sebastian Ceria, Chief Executive Officer of Qontigo
“The NYSE is proud to work with Qontigo on a solution that offers a significant growth opportunity for the ETF industry by allowing active fund managers to launch ETFs that protect their intellectual property while accessing a more efficient cost structure and global distribution capabilities,” said Douglas Yones, Head of Exchange Traded Products at the NYSE.
The NYSE AMS offers multiple proxy design options that properly implement target manager insights for the portfolio strategy, while maintaining an effective ETF arbitrage mechanism that supports listings for all active, semi-transparent ETFs. Built around the Axioma Portfolio Optimizer, the methodology allows a manager to restrict the securities used as part of the proxy, to lag the actual portfolio, and to determine the amount of overlap between the target and the proxy.