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Jeffrey Sardinha, State Street
Jeffrey Sardinha, State Street

Unique vantage point aids State Street’s offering

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State Street Global Services | Best ETF Middle Office Tech Provider in Canada

Jeffrey Sardinha, managing director, Head of ETF Solutions – Americas, State Street, answers the questions on their win in this year’s awards.

What is the size and scale of your business at the moment?

We service 72 per cent of the ETF industry in Canada, with USD241 million in assets across 12 issuers (as of 3/31/24). Globally State Street services 45 per cent of the overall ETF industry with in excess of USD5.65 trillion of assets under Admin/custody (as of 3/31/24). We appreciate the trust the ETF industry globally and specifically in Canada have placed in State Street.

What trends have you seen over the past year?

Every day State Street sees more than 10 per cent of the world’s investable assets flowing through our platforms for either custody, or accounting/admin. That gives us a unique vantage point across the board. When thinking solely about ETFs we see a few trends:

• Actively managed ETFs represent an increasing percentage of new entrants, launches, and larger portion of flows at just under 40 per cent of overall flows from a asset base of 28 per cent (as of 3/31/24). Listed ETF share class as well as reduced transparency requirements have aided in the growth and popularity of the actively managed structure. Canada is a great example of what the actively managed ETF marketplace could be in other jurisdictions.

• Digital assets are an emerging area of innovation as regulators have approved spot crypto launches in Australia, Brazil, Canada, Germany, Hong Kong, Sweden, Switzerland, Thailand and United States.

• ESG products have mixed reviews jurisdictionally but continue to be a point of discussion. ESG is only really gaining traction in EMEA with the passage of SFDR legislation.

• T+1 Settlement went into effect in May 2024 for the US, Canada and Mexico. Managing ETFs in a T+1 environment requires a controlled, automated and expedited solution built to accommodate the nuances of ETFs across primary and secondary markets. The industry did a great job joining forces to ensure ETFs were ready to go on day one. From our vantage point we haven’t seen any major impacts to the efficiency or costs associated with trading/owning the ETF.

What plans do you have for growing your business over the coming year?

By creating further differentiation with our Alpha for ETF (front to back) capabilities. Taking a complex workflow and making it more efficient with real-time integrations across the technology stack at State Street that manages the lifecycle of the ETF. As ETFs get more active and complex the need for accurate more timely data is a necessity.

Globalisation of Fund Connect, our order taking technology, including FIX and custom API connectivity.

Every firm should be spending time developing or investigating more AI and machine learning tools in support of ETF operations. The State Street goal is to continue to reduce the friction on transacting with the ETF in the primary market.

How will your firm be able to support new strategies?

The State Street ETF servicing technology stack is global and proprietary. Any innovation of theme we see in one market typically travels the globe to other markets. This means our ETF platform from order taking all the way through middle office, accounting/custody, and settlement are enhanced one time for that first innovation in a market and then available to all in other markets. State Street is typically ahead of innovations in most markets based on how we designed our technology stack. We have commitment from our most senior leaders down to the entry level. Servicing is the key part of our business and ETFs are a growth engine. We have a global ETF product team that sits outside the operations and is an advocate for both the ETF industry as a whole but more importantly, advocates for our clients. The ETF product team can work with the industry to align all the operational enhancements needed to support the innovations. Lastly, we have top people. We have roughly 175 global ETF experts that touch various parts of the nuanced ETF operations.

Why do you think you won this award?

State Street have received this award given our strong commitment to constantly improve our technology in the middle office and enhance our End-to-End ETF servicing capabilities. Our enhancements to our Middle office offering over the years has allowed us to support all the ETF nuances and keep pace with various key ETF trends reducing the friction of managing an ETF.

To read the rest of the report please click here.

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