General
- WHAT IS TSX NAVex?
TSX NAVex is a new mutual fund platform targeting investment advisors that execute their financial order instructions through an IIROC registered dealer. The objective was to design a business model that would provide the same end-of-day Net Asset Value (NAV) execution that advisors have come to expect from mutual funds, but to also realize the benefits of bulk trading and a lower transaction cost model. The platform will leverage the operational efficiencies of TMX equity order and settlement infrastructure, providing seamless service to TSX-connected dealers.
- WHAT IS REQUIRED FROM A FUND MANUFACTURER TO PARTICIPATE ON THE PLATFORM?
- TSX NAVex membership agreement must be signed
- Products to be posted on the platform must be approved by TSX
- Products must be CDS eligible
- Technical certification must be finalized to confirm ability to deliver a standard NAV price file
- Identification of the manufacturer's designated transfer agent and clearing broker
- ARE FUNDS ON THE PLATFORM LISTED LIKE A STOCK OR ETF?
No, funds on the platform are not listed on TSX and are not subject to TSX listing requirements. A precondition for funds to be posted on the platform is that they must be approved by applicable securities regulators.
- WHAT TYPE OF FUNDS WILL BE POSTED ON THE PLATFORM?
The platform is designed to bridge the gap from mutual fund providers to advisor-managed discretionary programs and fee-based platforms. As such, it is anticipated that products similar to F-series funds will be posted on the platform.
- HOW WILL MARKET PARTICIPANTS BE NOTIFIED OF FUNDS POSTED ON THE PLATFORM?
Funds on the platform will be assigned a ticker symbol and will be included in the TSX symbol reference feed that dealers receive today.
Functional Overview
- WHO CAN CONNECT TO THE PLATFORM?
Dealers who are also TSX participants will be able to connect to the platform.
- HOW WILL DEALERS CONNECT TO THE PLATFORM?
Dealers will be able to connect to the platform through their existing connections to TSX.
- CAN FUNDS ON THE PLATFORM BE BULK TRADED?
Yes, it will be possible to bulk trade on the platform. The discretionary and fee-based platforms that currently submit bulk orders for equities and ETFs will be able to submit bulk orders for funds on the platform.
- WHAT TYPES OF ORDERS CAN BE SENT TO THE PLATFORM?
Participants will be able to submit purchase and redemption orders in number of units.
- WHEN CAN ORDERS BE SUBMITTED?
Orders will be accepted from 7:00am to 4:00pm.
- CAN ORDERS BE CANCELLED OR CHANGED ONCE SUBMITTED?
Orders for funds on the platform may be cancelled or amended any time prior to 4:00pm.
- DO ORDERS TRADE AGAINST EACH OTHER LIKE A STOCK OR ETF?
No, purchase and redemption orders for mutual funds will not trade like stocks or ETFs. Orders will rest on the platform until the end-of-day NAV has been received and then filled directly against the fund manufacturer through the CDS settlement process.
- WHO CAN SEE ORDERS ONCE THEY ARE SUBMITTED TO THE PLATFORM?
Purchase and redemption orders will only be visible to the fund manufacturer and the dealer that submitted the order
- AT WHAT PRICE WILL ORDERS BE FILLED?
Orders will be filled at the fund's end-of-day NAV, as provided by the fund manufacturer.
- WHEN IS THE NAV DUE TO BE SUBMITTED TO TSX?
The NAV for each fund is required by 6:30pm.
- HOW WILL THE NAV BE SUBMITTED?
A standard file format will be provided for NAV submission through a secure FTP site.
- IS THERE ANY PUBLIC DISSEMINATION OF TRADING ACTIVITY?
There will be no pre-trade dissemination of trading activity. Post-trade information is expected to be provided to dealers through a market data feed, but will be limited to symbol and traded volume. The data feed will not disclose if a trade resulted in a purchase or a redemption.
- HOW WILL THE FUND MANUFACTURER KNOW OF A FUND’S TRADING ACTIVITY?
Daily trade information will be provided to each fund manufacturer after the transactions have been executed. Intra-day buy and redemption order volume will also be available if required by the fund manufacturer.
- WILL FUND MANUFACTURERS KNOW WHO BOUGHT OR REDEEMED THEIR FUNDS?
Order information will initially include only the dealer that placed the order.
Clearing and Settlement
- WHAT IS CDS?
CDS Clearing and Depository Services Inc. (CDS) is Canada's national securities depository, clearing and settlement hub. It provides for the safe custody and movement of securities, accurate record keeping, processing of post-trade transactions and the collection and distribution of entitlements relating to depository-eligible securities.
- HOW WILL TRANSACTIONS ON TSX NAVex SETTLE?
All transactions on the platform will be reported as trades to CDS for T+2 settlement between CDS participants. On the settlement date, TSX NAVex trades will settle via the exchange of cash for fund units in a book entry mode (electronic) between the counterparties.
- ARE THERE ANY ADDITIONAL RELATIONSHIPS REQUIRED FOR THE FUND MANUFACTURER TO SETTLE FUNDS THROUGH CDS?
The settlement model requires that each fund manufacturer use three primary CDS participants to facilitate settlement of a transaction.
Transfer Agent
The transfer agent is responsible for facilitating the settlement obligations for transactions. The transfer agent will receive treasury directions from the fund manufacturers and then confirm, deliver or withdraw fund units for settlement. The transfer agent will also produce funding letters for cash distributions and fund the distribution through CDS on behalf of the custodian.
Clearing Broker
A clearing broker facilitates clearing and settlement of mutual fund trades. If a fund manufacturer becomes a CDS-approved participant, they can perform this function.
Custodian
A custodian facilitates the creation and redemption of mutual fund units and works with the transfer agent to ensure delivery of cash or units for settlement obligations.
- WHAT DISTRIBUTIONS ARE ELIGIBLE FOR FUNDS ON THE PLATFORM?
Fund distributions will initially be limited to cash.
