BNY Mellon has introduced the industry’s first one-stop process for authorized participants (APs) to automate the creation and redemption of exchange traded funds (ETF).
The enhancements allow an AP to utilize the BNY Mellon ETF Center to propose and negotiate ETF baskets of underlying assets with a fund sponsor during the creation and redemption process.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
This is a significant improvement over the common industry practice, which required APs to utilize more than one venue to propose, negotiate and settle ETF baskets, BNY Mellon said.
APs are large financial institutions or market specialists that play a critical role in the ETF marketplace as they are chosen by an ETF sponsor to obtain the underlying assets needed to create or redeem an ETF.
Once an AP has negotiated an ETF basket with a sponsor, the AP transfers the shares to a custodian bank.
BNY Mellon global head of ETF services Steve Cook said: "Helping APs become more efficient ultimately benefits the other participants in the ETF marketplace, ranging from issuers to those in the secondary trading market. We pay particular attention to technology enhancements that support the AP community, because this community ultimately drives new assets into our clients’ ETF products."
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataCook noted the systematic ability to propose and negotiate ETF baskets is particularly important with fixed income ETFs and brings greater flexibility and efficiency to APs when processing fixed income ETFs.
BNY Mellon has a long history supporting the unique servicing needs of ETFs and has played a leading role in the development of procedures and systems integral to some of the first and most innovative products of the ETF industry. As of 31 March 2015, BNY Mellon supports 34 issuers offering 577 separate portfolios in the U.S., Europe and Asia with a total of $295bn in net assets.
