The Introduction of Same Day
Settling with ETF T+0
The ETF industry – where efficiency and speed have always been

SUMMARY

paramount – was notably one of the earliest industry adopters ofETF T+0 Create / Redeem Enhancement:This enhancement will unlock newopportunities for portfolio optimization, risk
management, and capital deployment. Key
benefits include: Enables same-day settlingtransactions, enhancing liquidity,agility and resiliency.
 Eliminates settlement delay, so
investors can quickly capitalize onmarket opportunities.
 Simplified workflow.

the accelerated T+1 settlement cycle. In response to this needfor transparency and immediacy, in 2024, DTCC introduced theinnovative ETF T+0 Create/Redeem enhancement.
Central to DTCC’s ETF T+0 Create/Redeem enhancement is theintroduction of a 3% Cash Collateral Amount added onto orders basedon the prior night’s Net Asset Value (NAV). This collateral provides anadditional layer of protection and flexibility, ensuring that APs market
makers can execute transactions efficiently, even in volatile market
conditions. Moreover, it mitigates the risk associated with potential
discrepancies between anticipated and actual NAV values.

Throughout the trading day, ETF Agents monitor market movements andNAV fluctuations. At the end of the day, once NAV is struck, an extra order file is submitted, including theCollateral Cash Adjustment (true-up). At DTCC, the true-up amount is processed and reconciles T+0 Create/
Redeem orders to the current day’s NAV, ensuring accurate pricing and regulatory compliance for all parties
involved. This novel approach not only enhances transparency and trust in ETF trading but also minimizes
the potential for arbitrage and market manipulation. The benefits of this enhancement extend beyond
immediate transactional efficiency. By reducing settlement times and simplifying workflows, market
participants can unlock new opportunities for portfolio optimization, risk management, and capital
deployment. Moreover, the enhanced liquidity and accessibility offered contribute to a more robust andresilient ETF market ecosystem.

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