“The Securities and Exchange Commission has begun issuing exemptive relief for market participant firms, paving the path for asset managers to launch a dual share class model for mutual funds, whereby ETF share classes will be offered alongside a traditional mutual fund. A dual-share class structure may provide investors with greater investment opportunities, allowing asset managers to scale their offerings and expand distribution channels for existing funds, resulting in broader access, cost savings and tax efficiencies for investors. However, in the absence of an automated solution for ETF to mutual fund share class conversions, this model could introduce operational complexity and risk.
DTCC recognizes the significance of these market developments and the need to meet the evolving demands of the diverse funds ecosystem. As an organization, we remain deeply committed to partnership and progress. In support of this development, DTCC will enhance its Fund/SERV platform, the industry solution for processing and settling mutual fund and other pooled investment transactions between fund companies and their distributors to support automated mutual fund to ETF share class conversions. Industry testing is on track to commence in Q1 2026 and is expected to launch in Q2 2026, subject to any necessary regulatory approvals. This new capability aims to meet the market demand by supporting faster processing, reduce manual work and streamline operations.”
