Amex and Iverson to monitor ETFs

AEM includes all the relevant ETF constituent data, including the most current trade date share quantities, component weighting, cash components and net asset values. Each night, clients get the identical composition variables published by the ETF fund managers and trustees for use in defining the next trade date creation/redemption units. Clients contract directly with Iverson for the data, much in the same way Iverson customers receive the Global Index Monitor service.

Bob Tull, executive director of Amex ETF Services, said Iverson makes the Amex ETF portfolio composition information more readily available to its member firms and other interested parties.

Iverson got its foot in the door when questions on the ETF files began to escalate from compliance and risk management people at larger firms and banks who wanted better price and position data than they were getting from their trading desks. Iverson fit the bill as an independent, third-party source for the data, according to Tull.

Tull said the exchange didn’t want to manage this type of data distribution service, hence the decision to farm it out to Iverson.

"We are providing a distribution service that Amex does not want to do. The arrangement shoehorns into our plans in the index world, especially ETFs, which we view as the next horizon for us," said Kent Lazarus, Iverson’s chief operating officer.

The exchange derives fees from the licence arrangement it has with Iverson, but neither party would elaborate on the financial arrangement.

ETFs represent shares of ownership in either funds or unit investment trusts that hold portfolios of common stocks or bonds. They are designed to correspond to the price and yield performance of the underlying indexes, which can cover the broad market, industry sectors, international share baskets or US fixed-income securities. Users can buy or sell an entire portfolio of stocks or bonds in a single security. ETFs trade like common stock each trading day, with price updates every 15 seconds. They are marginable, can be shorted even on downticks and can be handled as limit and/or stop orders.

ETFs are created or redeemed daily via a creation/redemption process to meet demand or terminate shares on a daily basis.

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