State Street has launched a service for the exchange-traded fund market to help clients process ETF orders more efficiently and in an automated and streamlined fashion.
ETFs currently account for more than USD1trn in global assets under management and remain an efficient, low-cost, transparent and tax-friendly investment tool.
With State Street’s Assisted Trading service, authorised participants, typically market makers or specialists who obtain the underlying assets to create ETFs, can simultaneously enter the ETFs they want to trade and identify any restricted shares via State Street’s FundConnect platform.
Restricted shares are securities that are not eligible for proprietary trading and change daily based on underwriting, mergers, investments and other activities.
Previously, the method for identifying restricted shares within ETFs was manual and intensive.
Using this capability, the restricted shares are segregated and sent to State Street Global Markets, the company’s investment research and trading arm, to be traded. This process ensures that the authorised participant is completely in compliance with all regulatory and exchange requirements when trading ETFs.
“Since 1993, State Street has differentiated itself among other ETF service providers through its leading-edge technology, consultative client approach and flexible servicing model to service ETFs,” says Frank Koudelka, senior vice president at State Street Global Services. “Our new offering automates the way in which clients handle restricted securities, making it a seamless process with a clear audit trail that facilitates compliance with regulatory requirements.”
The Assisted Trading service is accessed through FundConnect, State Street’s online trading platform for ETFs, which is integrated with State Street’s transfer agency recordkeeping platform. The transfer agent releases the approved orders to the ETF accounting platform and the depository via DTCC Fast.