BlackRock Rallies Largest Custodians in ETF Push

BlackRock’s ETF arm iShares has unveiled a custody initiative to enable U.K. pension funds and other institutional investors to access ETFs directly through their custodians for the first time.

BNY Mellon, State Street, HSBC and JP Morgan are working with iShares to simplify the ETF purchase process so that schemes can now buy and sell ETFs directly through their custodian.

A small number of the U.K.’s largest institutional investors, commonly those authorized and regulated by the Financial Conduct Authority (FCA) with an in-house team, use brokerage accounts to access listed securities, including ETFs. These are held for portfolio rebalancing, tactical exposure, hedging and liquidity management.

With U.K. pension funds’ growing interest in passive investments funds solutions, many trustees and their advisers are exploring the role of ETFs to access global markets in a liquid, transparent and cost effective manner.

Through this latest initiative, these resulting trades are then settled and held within the client’s custody account in a simple and streamlined transaction process. This answers the need for the ability for schemes to buy directly held stocks and shares

“By simplifying the investment process, the major custodians are helping their U.K. clients to access one of the most dynamic areas of the market. Investors globally are using ETFs as an efficient way to implement their views, and today’s initiative brings that same opportunity to thousands of pensions schemes in the U.K.,” says Mark Johnson, head of iShares U.K.

“By helping more clients to get easier access to additional products, we will help develop the market and through our dedicated ETF trading desk and market leading ETF fund administration business, we’ve brought together our expertise in order management, trading and settlement to produce a seamless end-to-end service that will benefit U.K. institutions and most importantly, the beneficiaries,” says Ian Gass, CEO, BNY Mellon Capital Markets EMEA.