On 27 November 2023, ASX released its Response to the July 2023 Consultation Paper on the future of the ASX Managed Fund Settlement Service (mFund).  Having assessed the submissions received in response to the Consultation Paper, ASX has made a decision to wind down and close the mFund service.

The Response Paper summarises the feedback received in response to the Consultation Paper and outlines ASX’s reasons for winding down and closing the mFund service which include:

• Support for retaining mFund was generally qualified, with feedback typically emphasising the need for ASX to address various operational and connectivity issues with the service. It was unclear from submissions to what extent addressing these issues would improve the future growth prospects of mFund.

• The majority of respondents confirmed that mFund was not a material part of their existing business or central to their distribution strategy going forward.

• Self-directed and advised investors are unlikely to adopt mFund at scale or to the same extent that they adopt exchange traded funds (ETFs).

• Recently introduced Design & Distribution Obligations have impacted the willingness of issuers and brokers to offer a broad range of alternative investment strategies and asset classes to investors through mFund.

• Active ETFs and the dual access ETF structure are expanding the range of strategies that are available to investors, reducing the comparative advantage of mFund over the ETF structure.

ASX is proposing a wind-down period of approximately two and a half years with a target date to have all funds removed from the service by 31 May 2026. The wind down period reflects feedback received from respondents to the consultation and acknowledges the amount of work involved in the process.

Next Steps

From the date of this market notice, ASX will:

• Keep mFund open for applications and redemptions from investors until further notice.

• Continue to support existing admitted mFund products, mFund accredited ASX Trading and Settlement Participants, and Product Issuer Settlement Participants (PISPs).

• Cease accepting:
  -  Applications from product issuers for the admission of new mFunds, and
  -  Applications from new Product Issuer Settlement Participants

• Establish an Industry Working Group (mFund IWG) of mFund stakeholders to facilitate communication during the wind-down period and assist with the scheduling of closure activities. Further information regarding the mFund IWG, including how to participate, is available on the mFund wind down resources page here.

Need more information?

ASX has prepared a series of FAQs for participants, which can be found on the mFund wind down resources page here.

ASX has also prepared a series of FAQs for investors that can be found here.

If you have any questions about the wind down or ongoing support of the mFund service please contact the following members of the ASX Investment Products team.

Andrew Campion
General Manager, Investment Products and Strategy, ASX
Andrew.Campion@asx.com.au

Rory Cunningham
Senior Manager, Business Development, Investment Products, ASX
Rory.Cunningham@asx.com.au

Ashley Parker
Project Manager, Investment Products, ASX
Ashley.Parker@asx.com.au

Issued by

Andrew Campion,
General Manager, Investment Products and Strategy, ASX

Contact information

Andrew Campion
+61 (2) 9338 0000
www.asx.com/contact

Disclaimer