Editor’s Note: A previous version of the article incorrectly added a market ticker to Fidelity Investments. The article has been updated to reflect the correction.
Fidelity Investments is reportedly pressuring ETF firms to pay for listing and maintaining their products on its platform, a move that has stirred up industry discontent.
What Happened: Fidelity, a major player in the investment space, has already secured agreements with nine boutique firms. This comes after the company warned them in March about potential charges for their ETF investors if they didn’t reach a deal, Bloomberg reported on Tuesday. The company is now in discussions with other asset managers for similar revenue-sharing agreements.
Although maintenance fees are not new for mutual fund firms, they are less common for ETFs. This move could lead to increased expenses in a market known for its cost-conscious nature.
Under the proposed agreements, Fidelity would take 15% of total fund revenue. The company has also suggested a potential charge of up to $100 on investors who buy a fund from a firm that doesn’t agree to the deal.
Fidelity’s move is seen as an attempt to generate new industry revenues amid a shift from mutual funds to generally cheaper and more tax-efficient ETFs. Critics argue that this could stifle innovation in the ETF space and make it harder for new firms to operate.
Fidelity has yet to respond to queries emailed by Benzinga.
Why It Matters: This move by Fidelity is significant in the context of its recent activities in the ETF space. In March, Fidelity added staking to its proposed Ethereum ETF application, aiming to allow ETF investors to earn additional income through staking rewards.
In May, the company filed an amended S-1 application for its spot Ether ETF with the SEC, a move that could mark a milestone in the mainstream adoption of Ethereum.
Image via Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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