Three key areas keep State Street ahead

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Ciaran Fitzpatrick, State Street

State Street Fund Services | Best ETF Middle Office Tech Provider | Best ETF Administrator – Fixed Income ETFs - State Street is easily the biggest ETF servicing firm in the world, with its purchase of BBH last year, making it also the largest service provider in the world.

Ciaran Fitzpatrick, managing director, Head of ETF Servicing Europe says: “We are always a target for other service providers as we are the biggest but there are three key areas that we focus on: experience in the product, the technology to support the product and the right people to work with our clients.”

Fitzpatrick says that the bank continues to invest in the three and to work with authorised participants and ETF issuers to build out new technologies to support their role. This has been seen this year with enhancements around dealing calendars and switching technology within State Streets Fund Connect platform “We have been very fortunate to maintain the key people who service our ETF clients and help manage the overall ecosystem that we offer as a service provider,” he says.

“One of our key successes over the last decade is we have created a dedicated ETF servicing team for all our European issuers to ensure that the asset managers and APs are always working directly with a team of ETF experts at State Street who have an average of 10 years of experience servicing ETFs.”

State Street also offers thought leadership to its ETF clients and to the market, a recent example of which has been its reaction to the arrival of the Central Securities Depositary Regulation (CSDR).

“We identified that it would have a big impact on the ETF ecosystem so we set up a working group inviting every ETF issuer and service provider in Europe to join us in a monthly session for the past year, with an end goal of ensuring a harmonised approach to the implementation of the regulation for ETFs.

“We don’t rest on our laurels because we always know what investment other service providers are putting into their models and the competition is increasing in Europe, which keeps us on our toes,” Fitzpatrick says.

In terms of ETF trends, Fitzpatrick notes that there is a rise in active ETFs and predicts that 2022 to 2023 will see new issuers entering the ETF space with a true active management offering, while maintaining daily transparency. “That will allow a different area of the market to grow for ETFs,” Fitzpatrick says.

He has also noted that big mainstream ETF issuers are launching bitcoin products and the bank is working to keep nimble in the space, while adhering to regulation. State Street has a dedicated digital asset team and is building out a custody model for digital assets.

“They are here to stay and we are excited about that space and it will build more trust in the market if State Street can service them too,” he says.

A final trend he has noted is the potential development of listed and unlisted shares classes of ETFs, with ETFs offering a non-exchange version, offering unlisted access for investors, much like a mutual fund.

 

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