BNY Mellon's Role in the ETF Industry

In the lastest milestone reached in the ETF industry this year, The Bank of New York Mellon (BNY) (BK) announced on Tuesday that it has exceeded $100 billion in ETF assets under custody for the first time.

BNY, which maintained just a single portfolio of less than $1 billion a decade ago, is now by far the largest ETF custodian in the industry, servicing more than 350 separate funds.

“This important milestone reflects the recent market upturn and the unwavering emphasis that BNY Mellon has put on delivering superior asset servicing capabilities for this rapidly growing segment of the global funds industry,” said Joseph Keenan, managing director and head of financial institution relationship management for BNY Mellon Asset Servicing.

BNY’s services include fund custody, accounting and administration, and transfer agency. BNY serves as the trustee for several of the largest and most heavily-traded ETFs on the market today, including State Street’s Gold Trust (GLD) and MidCap SPDR (MDY) and PowerShares‘ QQQ Trust (QQQQ).

BNY’s role in the ETF industry has been the topic of some discussion lately, as different statistical bulletins put out by the industry treat BNY funds in different manners. State Street’s monthly ETF snapshot, for example, lists BNY as the fifth largest manager by asset size, with six funds totaling more than $20 billion in May (these funds include QQQQ, the four PowerShares BLDRs funds, and MDY).

But data maintained by the National Stock Exchange puts BNY as the seventh largest issuer, attributing only MDY to its account.

As I’ve dug into these numbers a little more, I’ve found that there are a lot of inconsistencies and confusion. I’ll have a lot more on this topic tomorrow – stay tuned.

Disclosure: No positions at time of writing.

Comments

[Prudent Man...:]

What should be "dug into" is the insider profits made by the sponsors and insider arbitrageurs who profit dearly with the control of the amount of share outstanding of the ETF and its fundamental make up of issues. You may not be getting what you paid for.

The ability to contract and expand is virtually impossible to do in many ETF portfolios, especially bond and commodities, where positions are not easily executed.

The ETF concept is o.k. it is the execution, in some cases, that are of suspect to me. I am diligent about minimizing my risks should some become "Black Swans" and blow up. It had been falsely claimed that money market funds couldn't and some did.

Jul 01 02:14 PM