BlackRock splits custody business for Irish-domiciled ETFs

BlackRock has appointed BNY Mellon as an additional custodian for €673bn Dublin-domiciled iShares exchange traded funds, splitting custody for the business between two post-trade service providers.

The US bank and custody giant joins domestic rival State Street as a depositary and administration service provider for the Irish ETFs.

The $10tn US fund giant said the move mitigated risk and created efficiency.

According to the world’s largest asset manager, the split will strengthen its ETF operating platform by diversifying its post-trade service providers.

This article was previously published by Ignites Europe, a title owned by the FT Group.

The move follows its 2021 announcement of the diversification of post-trade custodians for its US-registered ETFs.

Under the plans for the Irish ETFs, BNY Mellon will provide depositary, including custody, fund administration and fund accounting services to a selection of Dublin-domiciled iShares ETFs.

State Street will continue to be the registrar and transfer agent for all Irish iShares ETFs.

“The end state of this project, after the transitions of assets in the coming months, will lead to broadly a 50-50 asset split for depositary and administration between State Street and BNY Mellon based on today’s valuation,” BlackRock said.

The move only affects the asset manager’s Irish ETFs. Fund administration and depositary for the rest of its European iShares ETF ranges, including those domiciled in Germany and Switzerland, will remain with State Street.

Ignites Europe reported last year that State Street’s dominance in servicing Europe’s ETF market could be a problem for the sector, as the bank acts as custodian for more than two-thirds of European ETF assets.

*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at igniteseurope.com.