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Every ETF considered for the Arc ETF catalogue passes through four sequential gates, and failing any one of them is disqualifying — there's no partial credit, no "mostly compliant" tier. The first gate is liquidity: if a fund can't be exited cleanly under normal market conditions, it doesn't belong in a retail product regardless of its other qualities. The second, and most directly relevant here, is the halal screen itself — assessed against prohibited-sector exposure (alcohol, conventional interest-based finance, weapons, gambling, and adjacent categories) and excessive speculation, or gharar. The third gate checks on-chain tokenizability — whether the fund's holdings and returns can be made fully verifiable, not just claimed. The fourth is cost efficiency, screening out funds where fee structures erode the underlying return past the point of being worth holding.
Picture a robed figure standing at the base of a ramp, gently turning one animal away while waving others through — no confrontation, no drama, just calm, deliberate selection at the threshold. The animals welcomed through continue up the ramp exactly as they would have anyway. That's closer to what this screening looks like in practice than a dramatic rejection process: most funds that fail simply don't make it onto the list. There's no negotiation, no "close enough."
Worth being direct about the limits of this process, because overclaiming here would undercut the entire point of publishing a methodology: our Global Equities and Fixed Income baskets pass the full four-gate screen cleanly. Our Emerging Markets basket carries what we classify as a partial screen — some underlying holdings in that market tier have financial-sector exposure that's structurally harder to fully exclude without collapsing the basket's liquidity or diversification. We disclose this per-basket, not as a blanket platform-wide claim, because a saver choosing Emerging Markets deserves to know exactly what they're opting into, not a reassurance that smooths over a real distinction.
