Holistic approach puts BNY Mellon ahead

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Jeff McCarthy, BNY Mellon

BNY Mellon: Best ETF Administrator (Equity ETFs) & Best ETF Custodian – Jeff McCarthy, Segment Head, Exchange-Traded Funds, BNY Mellon believes that the firm’s holistic approach to providing ETF solutions lies behind their two awards this year.

“We are focused on how we can enable the ETF ecosystem to become more efficient,” he says. “We advocate to partner across both clients and the industry to identify ways to drive change with the goal of removing friction across asset manager and investor value chain. BNY Mellon OMNI platform enables that delivery.

“OMNI is a client and data-centric open, modular platform designed to power and optimise your investment lifecycle. OMNI brings together BNY Mellon’s leading investment servicing solutions with resilient, systematic integrations so you can scale and grow your business,” McCarthy says. 

“We have spent a lot of time making sure that our custody, accounting, administration and ETF servicing is fully integrated into our clients’ middle and front office. Globally, we have a robust offering of full-service capabilities across North America, EMEA and APAC.

“We support a number of European asset managers, for whom we service across multiple domiciles and offer a consistent client delivery model. For those who are entering the market for the first time, we leverage our enterprise resources to deliver a full consultative partnership.

Among these is Goldman Sachs which entered the European market in 2019 supported by BNY Mellon. “We see tremendous growth opportunities across Europe, specifically for our custody, administration and ETF services,” McCarthy says.

2020 was a good year for BNY Mellon and the firm saw little disruption in the business, despite markets that were at times volatile. “Our create/redeem volume saw a spike of ETF orders of over 250 per cent during the height of the volatility in March and into early April,” McCarthy says.

“Our platform is fully automated and digital so it was a proof of testament that we can support scale and increased volumes without any disruptions to our clients.”

Globally, 2020 saw BNY Mellon process more than USD1.2 trillion in notional create/redeem orders. “We believe it is the largest volume in notional terms through a single platform” McCarthy says. 

McCarthy has identified a few trends in ETF types that started in 2020 and will continue, he believes into 2021. “The actively managed space is one that continues to be a hot topic and evolve,” he observes. “We will continue to see the delivery of actively managed strategies in the ETF wrapper and an increase in traditional asset managers offering ETFs alongside mutual fund and other structured products”

He also notes that cost pressures continue to weigh down on ETF providers. 

“We see a lot of focus on how we can deliver more streamlined front to back solutions for our clients as a response to fee compression,” he says. “Cost compression is sparking a lot of conversations across the ETF eco-system. How that cost can be lowered fits squarely with BNY Mellon, as that is our expertise and one area where our OMNI platform can be leveraged.”

Other trends set to continue in his opinion are increased inflows into ESG ETFs, technology and also commodities, particularly gold, reflecting some of the asset classes that took off in 2020.

He also believes that digital currencies are an interesting space and looks forward to leveraging BNY Mellon’s recently announced digital asset custody expansion to help bring to market a future bitcoin ETF. 

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