Fintech Spotlight: Nasdaq Democratizes Information, Fuels On-Demand Finance Trend

Benzinga will be holding its annual Benzinga Global Fintech Awards, a day of dealmaking, networking, and recognition in the financial technology space, on Nov. 11, 2021.

The event will award Benzinga Listmakers, those top companies part of Benzinga’s Global Fintech Index, for their accomplishments innovating, as well as merging the best of finance and technology.

In recognition of those disruptive innovators creating positive and diverse change within the financial services space, Benzinga chatted with Nasdaq Inc’s NDAQ Garrick Stavrovich and Devin McCarthy regarding the Nasdaq Fund Network.

About: Nasdaq, at its core, is a financial technology company.

Apart from supporting firms like Apple Inc AAPL, Alphabet Inc GOOGL, and Microsoft Corporation MSFT, from their earliest stages, Nasdaq offers numerous other products and services, all of which increase market access and transparency for both institutions and retail participants.

One service is the Nasdaq Fund Network, or NFN, which collects and disseminates performance, NAV, valuation, and strategy-level reference data for over 35,000 investible products.

“The goal of the Nasdaq Fund Network is to provide transparency and distribution for IRAs, asset managers, and both institutional and retail investors,” said Devin McCarthy, NFN managing director. “We work with the issuers of mutual funds, collective investment trusts, unit investment trusts, and we register those instruments and apply, whether it’s a five- or six-character ticker symbol, and then we publish that market data to over 400,000 different financial platforms.”

In the simplest way, NFN enables users to register their products and receive a unique symbol. Thereafter, Nasdaq disseminates product data and makes it searchable to nearly 100 million-plus investors, through online brokerages and market data providers.

Issuers and asset managers, in turn, benefit from the increased awareness, which can help gather assets for new and existing products.

“With the use of the NFN identifiers, you can now find insight into … the many other products that have been around, that the Main Street investor doesn’t really have insight or transparency into, and many of them have better returns than the market, in certain cases,” said Garrick Stavrovich, head of product development, Nasdaq Cloud Data Service.

Use Case, Recent Developments: Take Collective Investment Trusts (CITs), a type of tax-exempt, pooled investment vehicle, for example.

“CITs are very similar to mutual funds,” McCarthy explained. “They strike a daily NAV, but they’re only for qualified, institutional investors.”

For the last 80 to 90 years, according to McCarthy, CITs were relatively non-transparent and seldom published by major vendors and platforms. As asset management fees have declined, financial advisors, in the retirement planning space, are looking at lower-cost vehicles, like CITs, to recommend to plan sponsors.

“One of the things that we’ve done recently is being able to provide more transparency into this really opaque asset class,” the managing director noted. “CITs are advantageous to recommend because the fees are much lower than mutual funds, and that’s a trend we’ve been responding to, … allowing financial advisors and, ultimately, retirement plan participants to have access to this information.”

Adding, Nasdaq is currently hard at work, bringing standardization and transparency to the area of Separately Managed Accounts (SMAs), a space that has grown over the last few years.

“We’re working on the ability to register retail SMAs and models, to be able to give financial advisors and retail participants, that are invested in these instruments, more clarity into how their investments are doing.”

Innovation Outlook: In light of the data explosion, market participants are looking for better ways to derive actionable insights.

As a result, Nasdaq, in line with its commitment to fuel the new wave of on-demand finance and democratize information, is working on adding data to the NFN and augmenting it.

“That includes holding data, information regarding related fund strategies that we have on our platform, and being able to provide that out as part of the overall service we provide to the asset management community,” Stavrovich said. “People come to us for the insights of the NAV, dividend, and yield. It’s about … [providing] a one-stop-shop.”