Nasdaq, Invesco were engaged in talks on the QQQ proposals

Nasdaq, Invesco were engaged in talks on the QQQ proposals

Invesco Capital Management LLC (ICM), an indirect wholly owned subsidiary of Invesco Ltd (IVZ), has recently filed a preliminary proxy statement with the Securities and Exchange Commission (SEC) seeking consent from beneficial owners of Invesco QQQ TrustSM, Series 1 (QQQ) to reclassify it under the Investment Company Act of 1940 as a "management company" with a subclassification as an "open-end company" [1]. This move aims to transform QQQ from a unit investment trust to a more flexible structure.

The proposed changes include replacing The Bank of New York Mellon (BNY) as the current trustee with a board of individual trustees, with BNY serving as custodian, administrator, and accounting agent, and transfer agent. Additionally, ICM would be appointed as the investment adviser to QQQ under an investment advisory agreement with a unitary fee of 18 basis points, down from the current expense ratio of 20 basis points [1].

Nasdaq (NASDAQ: NDAQ) has responded to these proposals, clarifying that they will not affect Nasdaq's licensing arrangements with Invesco or the administration of the Nasdaq-100® Index. Instead, Invesco would pay the license fee through its unitary management fee, rather than QQQ paying it directly [2]. Nasdaq has affirmed its commitment to maintaining its strategic partnership with Invesco and continuing to provide the trusted benchmark for investors.

The proposed changes aim to unlock significant revenue for Invesco, which currently earns virtually nothing from running QQQ due to its current structure. If shareholders approve the request, Invesco will lower QQQ’s expense ratio to 0.18% and replace BNY Mellon as the fund’s trustee with a board of individuals [3].

Invesco is calling for a special meeting on October 24 to hold the vote. The proposed changes could have substantial implications for both Invesco and QQQ holders, potentially allowing Invesco to invest the freed-up revenue in other areas, such as new products [3].

References:
[1] https://finance.yahoo.com/news/invesco-files-preliminary-proxy-statement-120000466.html
[2] https://www.stocktitan.net/news/NDAQ/nasdaq-statement-on-the-preliminary-proxy-filed-by-invesco-qqq-trust-exbesfobxa6k.html
[3] https://finance.yahoo.com/news/invesco-aims-unlock-hundreds-millions-221049279.html