Any member of NSCC who has entered into an appropriate agreement with the Index Receipt Agent and Distributor is eligible to participate in this service.

Custom Index Share Processing through NSCC provides efficiencies and risk controls including:

• Providing participants with the opportunity to create and redeem domestic ETFs by eliminating securities that create a conflict of interest for a particular firm
• Providing a Daily Portfolio Composition listing to each participating member the day before the creation/redemption process
• Providing Instruction Detail files
• Providing clearance and settlement of the Index Receipts, as well as the underlying stock components, through NSCC's CNS and Non-CNS settlement systems
• Applying all the other benefits of CNS, including the NSCC central counterparty role to the creation/redemption process. (See the Continuous Net Settlement [CNS] fact sheet for further information on those benefits)

• On T-1, custom specified participants receive a custom Portfolio Composition report/file in addition to the standard domestic portfolio composition file. The custom file shows the customized version of the standard domestic index share, including the proportionate amount of underlying stocks that comprise each fund. This file also contains a cash component, which is an estimation of accrued dividends, any necessary balancing amount and portfolio cash values that represent the cash in lieu of stock omitted from the standard domestic index share. The portfolio information contained in this file is used for the next day's (called Trade Date, or T) creation/redemption processing.
• On Trade Date, the participant places a creation/redemption order for the custom standard index share through the Fund Distributor. After receiving the order from the Distributor, the Index Receipt Agent transmits an Instruction File to NSCC.
• On the night of T/morning of T+1, NSCC transmits an Index Receipt Instruction Detail File to participants who had activity on T. The report serves as the contract for the creation/redemption activity and lists the number of component shares and the standard index shares that the participant will deliver to or receive from CNS on T+3.