BNY Mellon, APs and ETFs

It says the enhancements allow an AP to use the BNY Mellon ETF Center to propose and negotiate ETF baskets of underlying assets with a fund sponsor during the creation and redemption process rather than use more than one venue to propose, negotiate and settle ETF baskets.

APs 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, notes BNY Mellon. Once an AP has negotiated an ETF basket with a sponsor, the AP transfers the shares to a custodian bank.

“Helping APs become more efficient ultimately benefits the other participants in the ETF marketplace, ranging from issuers to those in the secondary trading market,” said Steve Cook, global head of ETF Services at BNY Mellon. “We pay particular attention to technology enhancements that support the AP community, because this community ultimately drives new assets into our clients’ ETF products.”

Cook 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 points to a long history supporting the unique servicing needs of ETFs and how it 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 March 31, 2015, BNY Mellon calculates that it supports 34 issuers offering 577 separate portfolios in the US, Europe and Asia with a total of $295 billion in net assets.