State Street – Best North American ETF Fund Administrator

State Street is the largest global administrator of ETFs, servicing close to 1,000 ETFs that represent over USD600bn in AuM. State Street delivers distinctive value to its ETF clients across four dimensions: experience, capability, insight, and commitment. The firm’s best-in-class ETF servicing capability, TotalETFSM, leverages state-of-the-art technology, State Street’s global scale, and deep organisational expertise to provide individually customised solutions from the most sophisticated institutions through to ETF start-ups.

Experience: State Street’s history as the industry’s leading third-party ETF service provider dates back to 1993, when it developed the operational model to support the first ETF. As well as being the largest provider of ETF services globally, State Street is also the largest provider of actively-managed ETFs. In addition, it is the only ETF provider servicing each major ETF market with local ETF servicing expertise within Australia, Canada, France, Hong Kong, Ireland, Singapore, and the US.

Capability: The State Street Global ETF Platform is the firm’s ETF servicing solution that drives full automation throughout the lifecycle of an ETF from basket creation through to trade processing and settlement. “The Global Platform is integrated to 15 core State Street applications to create straight through processing and the most precise trading baskets in the industry. This provides authorised participants accurate basket reporting, making it easier for them to provide secondary market pricing,” explains Phillip Nanof (pictured), Vice President, State Street Global Services.

The platform leverages private cloud technology and provides total integration to core applications, including State Street’s robust accounting/custody platform and Fund Connect, its online ETF order management system. The platform also allows for full client transparency through a near real-time ETF dashboard on 

Major enhancements to the platform during 2014 included:

• State Street can now produce PCFs inclusive of trade-date derivatives (forwards, futures, swaps, options, swaptions)

• Fully automated dealing date +1 processing, allowing APs to lock-in basket constituents and quantities on trade date -1

• Developed systematic solutions for multi-class, multi-currency hedged ETFs to meet the needs of European clients

• Significantly improved supplemental PCF reporting allowing APs to more effectively hedge and make quality markets in State Street clients’ ETF products.

Insight: State Street deploys a team of ETF experts and dedicated project managers to support the launch of new asset managers as they enter the ETF market. Offering consultative services ranging from general ETF education, operational flow analysis, and the preparation of regulatory, oversight, and exchange listing documents, State Street’s team of servicing professionals ensures successful fund launches and delivers ongoing operational guidance. Additionally, the team provides clients with market and regulatory updates, statistics, trends, and news via a monthly ETF newsletter and a quarterly perspective report.

Commitment: State Street’s ETF servicing team was integral to a significant accomplishment in 2014: namely, successfully converting WisdomTree from one of State Street’s competitors in April 2014; the largest ever ETF conversion. 

WisdomTree wanted to expand products in the US and launch ETFs in Europe, but needed a partner with superior technology, service model, and experience, says Nanof, who adds: “The client saw the State Street service model and technology as a clear differentiator in the marketplace. The conversion was completed on time, without interruption to WisdomTree’s existing clients or growth plans. It also enabled WisdomTree to grow their products in the European market using the same technology, service model and automation.”

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