BNY Mellon, Citi, JP Morgan to Service iShares ETFs
BlackRock announced that it has entered into agreements with BNY Mellon, Citi and JP Morgan to join State Street as post-trade service providers for iShares’ $2.3 trillion in U.S.-domiciled exchanged traded funds.1 The announcement culminates a nearly two year-long due diligence process with the selection of several world-class financial institutions to support the growth of U.S. iShares ETFs and strengthen the broader ETF ecosystem.
The transition of any U.S. iShares ETF assets to the new providers is expected to commence in the second half of 2022 and projected to take 18 months to complete. The RFP and due diligence process for iShares’ Ireland-domiciled ETFs is on-going and the outcome will be announced at a later date.
Championing investor progress
Since the launch of its first ETF 25 years ago, iShares has helped make investing easier and more affordable for over 24 million Americans.2 iShares led the modernization of the bond markets through the advent of fixed income ETFs, brought additional sources of return to mainstream investors through sustainable, factor and thematic ETFs, and provided investors access to international markets and institutional strategies through an array of ETFs across asset classes. As the largest ETF franchise in the U.S. with 388 U.S.-domiciled ETFs, iShares provides investors with greater choice of investment styles than any other ETF provider.3
“Tens of millions of investors now choose ETFs to gain efficient and transparent access to sources of market return all around the world. Even as the ETF industry experienced record growth in 2021, ETF assets are still less than 3% of the markets they seek to access globally,4” said Salim Ramji, Global Head of iShares & Index Investing at BlackRock. “As we anticipate decades of growth ahead for iShares and the industry, these changes reinforce and diversify our operational foundation so that we can deliver more ETF exposures at greater scale and with the high standards that our clients expect.”
Paving the way for greater scale and efficiency
The selection of BNY Mellon, Citi, JPMorgan and State Street reflects these firms’ continued investment in their post-trade and technology platforms. Together they bring an expansive global servicing footprint, strong ties into the broader ETF ecosystem, differentiated service and proven expertise. Each firm will provide custodial, fund administration, fund accounting, and transfer agency services to a subset of U.S.-listed iShares ETFs.5
Approximate AUM Breakdown by Provider*:
*Percentages are approximate as of September 30, 2021 and are subject to change
“All four providers have long-standing relationships with BlackRock and have proven track records in the post-trade servicing of funds,” says Derek Stein, Senior Managing Director and Global Head of Technology & Operations at BlackRock. “The decision to diversify across these world-class financial institutions is based on our desire to create a robust operating model for servicing ETFs, which will help us scale the iShares franchise and mitigate concentration risk.”
Asset servicing has been expanded to include Australia, UK and Ireland.
State Street’s strategy is to create the number one asset servicer globally.
It is hoped that BNY Mellon will provide transfer agency and ETF services when the fund converts to an ETF.
Deal expands BNY Mellon's digital offerings and core capabilities.
A machine learning-powered document capture capability is the foundation of a multi-year investment.