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ETF WEBINAR :
Supporting the dramatic ETF ascent
Business leaders from the exchange-traded fund ( ETF ) servicing world convened online for a Global Custodian webinar last month to discuss the significant growth seen in the ETF space and how servicers are able to facilitate that growth and keep their clients happy .
The conversation began on the origins of ETF growth , with panellists agreeing that it has been due to a combination of both existing clients expanding their existing offerings as well as new entrants into the market . Add to that positive regulatory changes , which have encouraged a fresh wave of interest in the market , namely the introduction of Rule 6c-11 in the US in 2019 which was specifically designed to modernise the regulatory framework for ETFs . “ Many investment advisors who might be managing separately managed accounts see the passage of 6c-11 as their way into the registered space ,” said Michael Prendergast , senior vice president , ETF product lead at Ultimus Fund Solutions . “ It ’ s giving them some operational efficiencies , as well as providing a tax efficient product to their clients – so we ’ re seeing a lot of interest in that .
“ From my perspective , it ’ s like going back 10-15 years when the big mutual fund shops were trying to get into ETFs and you had to sit down and educate them on how it works . We ’ re having that same conversations with a different group of folk now – but it ’ s a whole new group that are coming to market and they do have slightly different needs .” This fresh influx of clientele coming to the market has encouraged a breeding ground for innovation in the market – as providers rush to meet the needs of the new entrants . Operating models have been tailored specifically to this to ensure businesses remain competitive in a tough field . “ You need to keep pace and you need to have a lot of options ,” said Michael Taylor , vice president , head of portfolio operations at RBC Global Asset Management . “ You need the ability to do pure index , passive index replication , rules-based ETFs , actively managed strategies , the ability to dictate specific situations ; that ’ s key in this environment . “ Working with the administrator and service provider to make sure that the technology and communication flow are vibrant and efficient allows you to keep pace . We ’ ve certainly seen that things can change in a heartbeat . You want to be able to adapt to those situations , continuing to develop your toolset and product offering to account for all the changes . That adaptability is key .” Ben Slavin , global head of ETFs at BNY Mellon Asset Servicing , picks up on this point , acknowledging that BNY Mellon has seen a trend of more sophisticated
62 Global Custodian Fall 2022