BNY Mellon Asset Servicing is dedicated to supporting growth in the global ETF business and being a first mover means it is due to be a leader in this space.
The ETF world is ever-expanding and BNY Mellon recognised the potential embedded within this market and built its resources and technology to support the growth of this popular business.
Joe Keenan, head of global exchange-traded fund services at BNY Mellon Asset Servicing, explains that the firm was a first mover in terms of ETF asset servicing is set to become a leader in this space as a result.
“We plan to continue to grow our US ETF business and position ourselves to benefit from the growth in assets in Europe and Asia,” he says.
The firm has already experienced noteworthy success in this space. Keenan says: “We’ve seen our assets under administration in ETFs take a pretty steep curve upwards, from $120bn at the end of 2009 to $200bn at the end of 2010 and $230bn year to date.”
And this is obviously good news.
Going forward, BNY Mellon will be focusing on the areas of ETF servicing where it has identified most potential.
According to Keenan, one such focus will be on swap-based derivatives. “This will be a good opportunity because we’ve seen a significant increase in requests for collateral management services,” he says.
Another area of further growth is securities lending – particularly the borrowing and lending of ETFs by hedge funds for arbitrage. Keenan says: “As we see more sophisticated ETF strategies being developed, we will see the need for more services such as securities lending. Therefore the growth will be significant.”
There is industry consensus that the ETF business overall, will continue to grow.
Keenen says he expects clients to launch around 100-150 new funds over the next six months and automation plays an important role in helping to support these developments.
“We were early adopters of automated systems and therefore we will continue to put our money where our mouth is and support the growth of the ETF business,” he says.
Another development in which BNY Mellon can further support its clients is the expected consolidation in the European funds industry. “As the European market continues to mature and captive distribution breaks down, we could see greater rationalisation in the industry. Therefore, we need to be there to support clients in managing any consolidation efforts,” says Keenan. He stresses the importance of being able to pick the winners in this environment. “To develop the relationships with the right businesses means we need to have the technology available to compete,” he says.
According to Keenan, the ETF business acts as a bridge and helps BNY Mellon build these relationships with the firms that will come out on top.
A key ingredient for success, says Keenan is drive. “We have a real passion for this business and the performance has been stellar,” he says.
©2011 funds europe