Money market exchange traded funds
The invention provides money market exchange traded funds (MMETFS) and methods to allow trading of money market funds on an exchange. The invention includes a new settlement method for the money market exchange traded funds that allows creation and redemption of MMETFs on the primary market as well as settlement on the secondary market on a shortened timescale relative to other exchange-traded securities.
1 . An exchange traded cash investment fund product comprising:
an investment fund with substantially all of its assets invested in short-term debt securities,
wherein shares of the fund are purchased with an in-kind creation basket or cash on a first day using the FED and DTC direct withdrawal at custodian creation process on a DTC computer system.
2 . The exchange traded cash investment fund product of claim 1 , wherein settlement of the purchase of shares on the first day occurs on the first day.
3 . The exchange traded cash investment fund product of claim 2 , wherein settlement of the purchase of shares on the first day occurs through a tri-party bank, and wherein the purchaser in an authorized participant who electronically transfers securities comprising the in-kind creation basket or cash in the authorized participant's tri-party bank account, the fund electronically transfers an equivalent value of fund shares in the funds' tri-party bank account, and the tri-party bank electronically transfers the fund shares to the authorized participant's tri-party bank account and the securities or cash into the fund's tri-party bank account.
4 . The exchange traded cash investment fund product of claim 3 , wherein shares of the fund are traded on an exchange using an exchange computer system with automated order executions.
5 . The exchange traded cash investment fund product of claim 4 , further comprising a computer system comprising an index calculation engine that calculates an intra-day indicative value of the fund.
6 . The exchange traded cash investment fund product of claim 5 , wherein the computer system comprising an index calculation engine further comprises a means for publishing the calculated intra-day indicative value of the fund to a consolidated tape system.
7 . An traded cash investment fund product comprising:
an investment fund with substantially all of its assets invested in short-term debt securities,
wherein shares of the fund are redeemed with an in-kind redemption basket or cash on a second day using the FED and DTC direct withdrawal at custodian redemption process on a DTC computer system.
8 . The exchange traded cash investment fund product of claim 7 , wherein settlement of the redemption of shares on the second day occurs on the second day.
9 . The exchange traded cash investment fund product of claim 8 , wherein settlement of the purchase of shares on the first day occurs through a tri-party bank, and wherein the purchaser in an authorized participant who electronically transfers securities comprising the in-kind creation basket or cash in the authorized participant's tri-party bank account, the fund electronically transfers an equivalent value of fund shares in the funds' tri-party bank account, and the tri-party bank electronically transfers the fund shares to the authorized participant's tri-party bank account and the securities or cash into the fund's tri-party bank account.
10 . The exchange traded cash investment fund product of claim 9 , wherein shares of the fund are traded on an exchange using an exchange computer system with automated order executions.
11 . The exchange traded cash investment fund product of claim 10 , further comprising a computer system comprising an index calculation engine that calculates an intra-day indicative value of the fund.
12 . The exchange traded cash investment fund product of claim 11 , wherein the computer system comprising an index calculation engine further comprises a means for publishing the calculated intra-day indicative value of the fund to a consolidated tape system.
13 . A method for creating shares of an exchange traded cash investment fund product with substantially all of its assets invested in short-term debt securities, comprising the steps of:
accepting an electronic transfer of an in-kind creation basket of securities or cash from an authorized participant for the purchase of shares of the fund into an account of the authorized participant, the account being in a computerized electronic database of accounts,
accepting an electronic transfer of shares of the fund with an equivalent value to the in-kind creation basket of securities or cash into an account of the fund, the account being in the computerized electronic database of accounts,
electronically transferring the in-kind creation basket of securities or cash from the account of the authorized participant into the account of the fund, and
electronically transferring the shares of the fund from the account of the fund into the account of the authorized participant,
wherein both of the accepting steps and both of the electronically transferring steps occur on the same day.
14 . The method of claim 13 , wherein a tri-party bank computer system executes both of the accepting steps and both of the electronically transferring steps.
15 . The method of claim 14 , wherein shares of the fund are traded on an exchange using an exchange computer system with automated order executions.
16 . The method of claim 15 , further comprising the steps of:
comparing data from the exchange regarding the trade of the shares of the fund with data from a broker regarding the trade of the shares of the fund,
finding a difference between the data from the exchange and the data from the broker, and resolving the difference.
17 . The method of claim 15 , further comprising the step of calculating an intra-day indicative value of the fund on a computer system.
18 . The method of claim 17 , further comprising the step of electronically sending the calculated intra-day indicative value of the fund to a consolidated tape system.
19 . The method of claim 17 , further comprising the step of daily electronically transferring data comprising a portfolio composition file that contains a database of the quantity of each of the securities held by the fund to authorized participants from a computer system maintained by the fund.
20 . The method of claim 19 , further comprising the steps of:
electronically calculating a value of the fund using the portfolio composition file on a computer system maintained by an authorized participant, and
comparing the value of the fund calculated by the computer system maintained by the authorized participant using the portfolio composition file with the intra-day indicative value.