Some asset servicers failing to keep up with ETF growth

The growth of exchange-traded fund (ETF) investing could be putting pressure on the legacy systems of asset managers and asset servicers.

The biggest challenge highlighted in the Temenos Multifonds survey in offering ETFs is operational technology and systems.

Liquidity risks and operational errors were cited by 34% and 20% of the respondents, respectively, according to the firm, which surveyed 151 asset managers and service providers.

Switzerland-based Temenos Multifonds, which provides investor-servicing and accounting software, reported that 1-in-4 respondents said “not all service providers are currently keeping pace with the increasing ETF growth and complexity”.

But asset servicers who can fully support ETFs will have a competitive advantage moving ahead, with 83% of survey respondents highlighting this fact.

Commenting on the findings of its ‘Every Fund Survey’, Oded Weiss, managing director of Temenos Multifonds, said: “While fragmented legacy systems and bolt-on surround technologies may have coped in the past, the asset management industry is increasingly realising that this approach is not fit for purpose moving ahead.

“Servicing ETFs quickly, efficiently and accurately raises particular challenges, and we are seeing an increasing number of clients looking to include ETF servicing in their core investment accounting system, all wrapped up in a single, global platform to handle both future growth and potential future regulation.”

Weiss said that with global ETF assets predicted to reach $7.6 trillion by the end of 2020, there’s a “massive opportunity” out there for those asset servicers who get it right.

©2018 funds europe

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