Authorized Participants Benefit from New Process
BNY Mellon, a global leader in investment management and investment services, has introduced the industry's first one-stop process for authorized participants (APs) to automate the creation and redemption of exchange traded funds (ETF).
The enhancements allow an AP to utilize the BNY Mellon ETF Center to propose and negotiate ETF baskets of underlying assets with a fund sponsor during the creation and redemption process. This is a significant improvement over the common industry practice, which required APs to utilize more than one venue to propose, negotiate and settle ETF baskets, BNY Mellon said.
APs are large financial institutions or market specialists that play a critical role in the ETF marketplace as they are chosen by an ETF sponsor to obtain the underlying assets needed to create or redeem an ETF. Once an AP has negotiated an ETF basket with a sponsor, the AP transfers the shares to a custodian bank.
"Helping APs become more efficient ultimately benefits the other participants in the ETF marketplace, ranging from issuers to those in the secondary trading market," said Steve Cook, Global Head of ETF Services at BNY Mellon. "We pay particular attention to technology enhancements that support the AP community, because this community ultimately drives new assets into our clients' ETF products."
Cook noted the systematic ability to propose and negotiate ETF baskets is particularly important with fixed income ETFs and brings greater flexibility and efficiency to APs when processing fixed income ETFs.
BNY Mellon has a long history supporting the unique servicing needs of ETFs and has played a leading role in the development of procedures and systems integral to some of the first and most innovative products of the ETF industry. As of March 31, 2015, BNY Mellon supports 34 issuers offering 577 separate portfolios in the U.S., Europe and Asia with a total of $295 billion in net assets.
BNY Mellon's Asset Servicing business supports institutional investors in today's fast-evolving markets, safeguarding assets and enhancing the management and administration of client investments through services that process, monitor and measure data from around the world. We leverage our global footprint and local expertise to deliver insight and solutions across every stage of the investment lifecycle.