[ M A R K E T R E V I E W | E T F A D M I N I S T R A T I O N ]
services have to able to not only derive baskets and files in their own shop , they have to be able to consume files from managers that are more sophisticated and active in that space . “ Baskets can be a variety of options and it ’ s all driven by taking the underlying data and enacting a standardised set of wishes from the front office on how they want to see that enacted . So it ’ s very important to be able to pass that downstream , have it quickly turned around into data that can be consumed by the market makers overnight . So data starts at the very front with the investment managers and ends up with the market makers and APs pricing it up on the exchange – so it ’ s fundamental to everything that we do .” As technology continues to evolve as a rapid pace , institutions will gain even greater statistical insights into their customers and product lines – informing the next iteration of ETF products . Harnessing that data effectively will be a key priority for firms across the world .
New horizons As the global ETF market grows , competition for market share in the likes of Europe and South America is heating up . However , fragmented regulatory environments and difficult distribution lines mean it can be very tough for market entrants . “ These are things that need to be figured out – distribution ’ s different , how they ’ ll sell the product ,” explained Prendergast . “ Those are the types of things we try to help point our clients in the right direction , make sure they ' re thinking about those types of things , that they understand that the distribution and selling an ETF is very different than probably what they used to even coming from the mutual fund space into ETF space .” To help tackle some of these issues in Canada , RBC Global Asset Management has signed a strategic alliance with BlackRock Asset Management and has joined the Canadian ETF Association , where different institutions work together on issues facing the market as a whole . “ It ’ s a very collaborative environment ,” said Taylor . “ It ’ s not just about helping each other stand up product and understand the regulatory and tax nuances , the challenges we have around data , APs and designated brokers . It ’ s about what ’ s going on in the industry from a broader perspective . The ETF community is very active in terms of communication on what ' s going on and giving yourself every opportunity to succeed on all of those fronts .”
Areas for improvement Looking ahead , the panel agreed that despite the success , there remains room for improvement across the market , as Martin explains : “ As an industry , we are very good at innovating , automating and getting products to market . But at the back of my mind , there ’ s two areas [ that need improving ]. Regulation is one , with different regulations are working at different speeds depending on where you are in the world . “ Secondly , I want to touch on connectivity to back-end systems , particularly in the custodial space . They don ’ t necessarily have the automation or the investment there . With T + 1 coming in less than two years ’ time , that ’ s going to take a lot of effort to factor in [ the connectivity issues ].” All things considered , the consensus on the panel was that the industry is in a good place . While there remains some areas for improvement , the market is buoyant with activity and demand is higher than ever before . Investment will continue to be key for servicers , improving their services and products in line with the heightening expectations from clients .
64 Global Custodian Fall 2022