CIBC Mellon has launched asset servicing for platform-traded funds (PTF) traded on NEO Connect, a new lost-cost fund distribution channel for assets not listed on a stock exchange.
The Canadian custody bank collaborated with NEO and other industry players to create the first PTF process in Canada.
“The Canadian investment industry continues to innovate in response to investor demand for lower-cost solutions. Platform-traded funds are a key step forward in enabling new efficiencies in administration and distribution,” said Ronald Landry, head of product and Canadian ETF services, CIBC Mellon.
“We are pleased to support our clients by helping them simplify the PTF administration process and deliver new cost-efficient fund solutions for Canadian investors.”
PTFs are typically a class or series of an existing investment fund that investors can buy or sell on the NEO Connect platform at an end-of-day net asset value (NAV) per share/unit. The funds are designed for investors with fee-based accounts that are seeking low-cost managed portfolios.
Through the asset servicing solution, CIBC Mellon acts as the clearing and settlement agent with NEO to enable investment fund providers to created platform-traded classes of their funds.
Using a NAV will also eliminate the impact of bid-ask spreads, and reduce administrative work associated with unique pricing for each transaction.
“We are pleased to collaborate with CIBC Mellon and a number of its investment fund clients in providing an innovative and efficient solution that enables investors to access an array of management strategies,” added Jos Schmitt, president and CEO, NEO.