Technology helping governments & citizens, one line of code at a time

Screen Shot 2020-03-23 at 17.56.08

Moral hazard issues are endemic in financial crises, as we all know from the most recent GFC triggered from subprime mortgages. As we are witnessing a bazooka round of government aid ready to hit the market, the moral hazards are being revisited.

I will attempt to stay on topic and not comment on social & political issues around the current stimulus policy decisions in each country. I will focus on how technology can be used to make things better in these circumstances.

In America the government, the states, the municipalities, the cities are far from being Digital, let alone having technology that allows them to track flows of the money flows allocated in the economy.

A “stimulus package to the American worker” is underway that practically means a check of $1,000 or $1200 to pay rent, bills or buy groceries. The details of who and how this check can be claimed are going to be announced soon.

Americans will receive by traditional mail, a check and will have to be creative on spending it as bank branches are unable to service these deposit needs. American may countersign the check to their landlord or create a community secondary market of checks that is facilitated by those that have cash from ATMs (good for grocery shopping).

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.


You get 3 free articles on Daily Fintech. Get all our fresh content and our archives and participate in our forum, by becoming a member for just US$143 a year.

Juxtapose this with the Digitization in Singapore. In 2016, Singapore announced the launch of the Government Tech Agency

Here’s how Singapore plans to make its services as easy as Facebook Connect.

A long-term plan to digitize the functions of governance and public life.

I pick the Singaporean example of GovTech led digitalization (there are other well-publicized ones, like Estonia) because in these `never seen before` circumstances they were able swiftly to launch three services

TraceTogether A community-driven contact tracing app to help during the COVID19 spread. Own your data and use Bluetooth P2P communications to share your close contacts. Give permission to the Ministry of Health to quickly reach out to your close contacts if you are a COVID-19 patient. TraceTogether aims to protect families and communities, and stop the spread of COVID-19.

MaskGowhere An app to use your zip code and get info on mask distribution points

FluGowhere An app to facilitate the following: If diagnosed with any respiratory illness (even just a cold) you get full subsidy for medical treatment

Now imagine if America or state by state had built a GovTech ecosystem that would allow to not easily channel each of this one off payments but also to transparently trace that they are used accordingly.

Transparency of money flows would be a blessing in this situation. It would save the government and the citizens from all the moral hazards that were experienced during the GFC. One of the most eye-popping examples were banks that were eligible for favorable loans with subsidies which they subsequently used for share buybacks.

The digitalization of municipalities, states and governments is not only about operational savings but also about Transparency that can allocate capital and manage risks in a fairway.

So much to learn from other Smart nations, states, or cities.

Singapore has two kinds of IDs …

CorpPass, a digital identity to do business efficiently and safely online with the government.

MyInfo simplifies banking transactions by eliminating the need to re-produce documents for verification.

And on and on…

The Technology is available and inexpensive, the people to customize it for each country, state, city, are available, and the Need is screaming. Come on America, Switzerland, United Kingdom, Germany, ….

Come on New York State, Canton de Vaud, England, Bavaria,…

A boom in GovTech initiatives should be one of the positive side effects of this crisis. And since I am a BIG DREAMER, maybe we will finally get a Decentralized Digital Identity so that it can serve as a way to act collectively in similar situations that we all have the same interests and risks.

Image source

The post Technology helping governments & citizens, one line of code at a time appeared first on Daily Fintech.

`NonTransparent ETFs` one step forward and two steps backward

pros cons

The `NonTransparent ETF` wrapper caught my attention recently, while reviewing WealthManagement news and trends. What kind of innovative investment vehicle would choose in our times, this kind of name?

In late January this year, the SEC approved a new ETF wrapper and several companies will be able to launch active ETFs or license the wrapper to asset managers. T. Rowe had first applied for SEC approval to launch actively managed ETFs (what is now called `NonTransparent ETFs`) as early as 2013.

Undoubtedly, the growth of low cost, indexing, passive ETFs has been supported by digital innovations in wealth management. However, it is the incumbents that own the lion`s share of the low cost, passive ETF market. Similarly, it is predominantly incumbents that will be launching NonTransparent ETFs.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019. 

You get 3 free articles on Daily Fintech. Get all our fresh content and our archives and participate in our forum, by becoming a member for just US$143 a year.

NonTransparent ETFs are actively managed ETFs that offer all the advantages of the ETF wrapper – digital access, intraday liquidity, tax efficiencies, ect – for actively managed portfolios. The reason that they have been called `NonTransparent ETF` is that the managers are not disclosing their holdings on a daily basis but on a quarterly basis. The ETF manager will only disclose real-time his-her positions to the Authorised Participant that is the entity who provides the in-kind redemption process.

Eaton Vance has been the only company that already has an approved wrapper, the NextShares, which is an actively managed open-end fund trading on exchanges without regularly disclosing its holdings. ETMFs were launched in 2016 but the growth has been negligible.

Eaton Vance Stock NextShares (EVSTC) – $6mill AUM

Eaton Vance TABS 5-to-15 Year Laddered Municipal Bond NextShares (EVLMC) – $7mil AUM

Precidian received approval in Spring 2019, for their own proprietary NonTransparent ETF structure, the `ActiveShares` which can also be licensed.

In this recent approval, Blue Tractor a 5 year old company also received approval to license its proprietary model, Shielded Alpha, to asset managers who are interested to launch NonTransparent ETFs.

Actively managed ETFs

Actively managed ETFs already exist but they are no more than 2% of the entire ETF sector. They have predominantly been focused on fixed income which is an asset class that the portfolio holdings are not easily replicable. Most asset managers have had difficulties beating their benchmarks and at the same time offering low cost investment vehicles (even in funds) which has resulted in very low interest in equity actively managed ETFs.

As most opportunities in equities have been in smaller caps rather than larger caps and in international markets rather than US domestic markets, actively managed ETFs in larger-cap domestic caps seem challenging.

The NonTransparent ETFs that have been approved maybe (just maybe) will establish themselves especially as investment ingredients that financial advisors embrace. The question is whether financial advisors will stomach the opaqueness of these ETFs. I guess they would if the alpha produced is sufficient but that of course, is a chicken and egg problem.

The only example of fully Transparent Actively managed equity ETFs is the family of ETFs launched by ARKInvest, which I have covered from their early days.

The investment thesis of ARKInvest is Innovation. It offers five actively managed thematic ETFs whose holdings are fully transparent (with a small intraday reporting delay). ARKK is the largest ETF with $1.86billion AUM (Total assets under management for all five ETFs are just over $3billion)

Screen Shot 2020-02-17 at 10.51.14

ARK was awarded by Fund Intelligence in 2019, the ETF Suite of the Year. Cathy Wood, the CEO, has also been disruptive in the way research is conducted at ARKInvest. They have developed an Open Research process that allows them to go beyond the traditional financial analysis by including Theme Developers and experts and holding open debates around their investment themes. More here.

Two picks of noteworthy innovations of ARKInvest ETFs.

  • In the Fall of 2015 ARKW ETF, was the first ETF that invested in Bitcoin through Grayscale’s Bitcoin Investment Trust. I personally remember reading Chris Burniske`s (research lead at the time at ARKInvest) ARKInvest research at the time which was shared openly and led to their investment decision. The ARK Web x.0 ETF (ARKW) listed on NYSE Arca invests in  innovative internet technologies including cloud computing, big data, digital media, e-commerce, bitcoin and blockchain technologies, and IoT.


  • Currenrly, ARKInvest shares openly on their website and on the Github their valuation model of Tesla which is a core holding in three of their five ETFs. Tesla’s Potential Trajectory During the Next Five Years is their latest thinking around Tesla`s potential and the actual model with its inputs is on the github here.


The post `NonTransparent ETFs` one step forward and two steps backward appeared first on Daily Fintech.

Transparency, Transparency, Transparency in portfolio performance

Four years ago, I started preaching about Transparency in wealth management. In the Global Transparency movement in Portfolio Performance from the Daily Fintech archives in October 2015, I asked for `…  a world in which Barron’s top advisor annual rankings take into account performance. Believe it or not, right now these rankings don’t include performance […]

The post Transparency, Transparency, Transparency in portfolio performance appeared first on Daily Fintech.

InsurTech efforts and the customer- who is being served with tech?

image The customer- easily overlooked on innovation’s path, and the continuous need for insurance companies to keep the customer as the ultimate focus of any innovation efforts. It’s a good week to revisit a favorite topic of mine; after presenting sessions on mobile claim applications to adjusters at the Property and Liability Research Bureau’s regional […]

The post InsurTech efforts and the customer- who is being served with tech? appeared first on Daily Fintech.

Environmental Sustainability and Finance: Poker or Chess?

In early July, Onalytica published an article on Sustainability with a focus in the financial services sector. Comparing the WEF`s Global Risks Reports over the past 10 years[1], they highlight a stunning shift. We are confronted with the reality that Sustainability risks are Business, economy, and Societal risks. All industries are realizing this and the […]

The post Environmental Sustainability and Finance: Poker or Chess? appeared first on Daily Fintech.