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SIX launches ETF Sanctions Screening Capability

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SIX has launched ETF sanctions screening to the existing Sanctioned Securities Monitoring Service (SSMS), designed to support greater sanctions compliance for its global client base.

SIX writes that with heightened sanctions scrutiny, there is greater need for banks, asset managers and wealth managers to have transparency into all types of indirect investment vehicles, including ETFs. To address this market need, SIX writes that it has created a new module to provide a broad analysis of the constituent securities of ETFs.

Following the acquisition of ULTUMUS in July 2021, SIX has expanded the data coverage available to clients across passive funds. Now covering 97 per cent of the global ETF market (close to 10,000 ETFs), SIX writes that Ultumus is one of the largest ETF calculation houses in the world and offers global composition data and providing risk assessment and technical solutions. Now, covering the value chain from listing and trading to data and analytics delivery, SIX has developed a leading position in the Financial Market Infrastructure (FMI) ETF sphere.

SMSS from SIX brings together vast amounts of securities information, plus analysis of sanctioned entities and sanctions regimes for pre- and post-trade screening. Utilising the unparalleled ETF look-through data from ULTUMUS, this new module from SIX helps making ETFs more transparent for clients by identifying sanctioned securities present in ETFs.

If an ETF is tainted with sanctioned securities, SIX supports clients in identifying this change through access to daily sanctions data for most major regimes. This helps to minimise the risk level and protect market participants from compliance breeches or investment strategy misalignments, while also protecting the portfolio value should the sanctioned securities contribute to an impact on liquidity and devaluing of the ETF.

Oliver Bodmer, Senior Product Manager, Financial Information, SIX, comments: “Increased requirements from the Office of Foreign Assets Control (OFAC) to ensure all funds are screened for sanctions has added another layer of complexity for market participants with regards to their “sanctions compliance”. As a result of this new development, the SIX service now tracks and monitors ETFs, in addition to equities, bonds, structured products and options, to enable compliance with global regulatory jurisdictions and safeguarding our clients against compliance and portfolio risks.”

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