BlackRock has entered into agreements with BNY Mellon, Citi and JP Morgan to join State Street as post-trade service providers for iShares’ US$2.3 trillion in US-domiciled exchanged traded funds (ETFs).
As part of the agreement, BNY Mellon, Citi JP Morgan and State Street will provide custodial, fund administration, fund accounting, and transfer agency services to a subset of US-listed iShares ETFs.
The partnership culminates a lengthy due diligence process with the selection of several financial institutions to support the growth of US iShares ETFs.
The transition of any US 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.
Commenting on this, Derek Stein, senior managing director and global head of technology and operations at BlackRock, says: “All four providers have long-standing relationships with BlackRock and have proven track records in the post-trade servicing of funds.”
He adds: “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.”
iShares funds are powered by the portfolio and risk management of BlackRock. As the largest ETF franchise in the US with 388 US-domiciled ETFs, iShares provides investors with a greater choice of investment styles than any other ETF provider, says BlackRock.
With $3.04 trillion in assets under management as of 30 September 2021, iShares continue to drive progress for the financial industry, BlackRock adds.
The request for proposal and due diligence process for iShares’ Ireland-domiciled ETFs is ongoing and the outcome will be announced at a later date.
Salim Ramji, global head of iShares and index investing at BlackRock, comments: “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 per cent of the markets they seek to access globally.”
He adds: “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.”
Teresa Heitsenrether, global head of securities services at J.P. Morgan, adds: “Blackrock’s decision to award us additional business is a further testament to the investments we’ve made in our securities services business and our ability to provide scale, efficiencies and market-leading capabilities to our clients.”
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