Changes to cost structures may be on the horizon for investment managers and investors as Fidelity looks to offset its service operation expenses. Several exchange-traded fund (ETF) managers have recently entered into revenue-sharing agreements with Fidelity Investments, signaling a significant advancement in the ETF sector. This strategic move by Fidelity aims to solidify its position in a highly competitive market, especially as investor interest in ETFs continues to grow.
The focus of these agreements is to enhance Fidelity’s brokerage platform, potentially leading to adjustments in cost structures for investment managers and investors. The buzz in the crypto sector surrounds Fidelity’s latest efforts to collaborate with ETF managers on revenue-sharing deals. In response to Fidelity’s proposed service charge, nine ETF providers have agreed to participate in these arrangements.
Investors could face a fee of up to $100 or 5% of their purchasing position if managers opt out of the revenue-sharing agreement. This charge is intended to cover Fidelity’s service operation expenses and technological upgrades. David Young, CEO of Regents Park Funds, described the situation as a significant initiative driven by the need to manage platform maintenance costs. Young’s decision to join the revenue-sharing agreement was motivated by a desire to avoid excessive service fees.
The rapid expansion of the ETF industry has necessitated innovative approaches from platforms like Fidelity to handle the influx of ETFs. While revenue sharing is common in the thriving ETF sector, it is less prevalent in traditional wealth management. In other news, Norwegian authorities have successfully recovered $5.7 million from the $600 million Ronin hack, showcasing ongoing efforts to combat cybercrime.