BlackRock, BNY Mellon and State Street sign up for Markit ETF collateral lists

Firms sign up for new service designed to optimize ETFs

BlackRock, BNY Mellon and State Street have accepted Markit’s ETF collateral lists to be included in their collateral management schedules.

The financial information provider supports securities lending by identifying which equity and fixed income ETF’s to accept or post as collateral.

Under the new arrangement, BlackRock, BNY Mellon and State Street will be able to reference their own collateral lists and simplify reviews of collateral eligibility by risk departments.

Director of securities lending and finance at BlackRock, Tim McLeod, spoke of how the service will enhance its capabilities. 

“The classification of ETFs into easily-assessable filters represents an important step in standardising the way the industry looks at ETFs as collateral instruments.

“Removing the need to assess the viability of ETFs individually, and instead analysing a broader set of common attributes, is a much more dynamic and robust model for lenders, borrowers and triparty agents alike.”

Peter Khemdoudi, managing director of securities finance at Markit, added: “A lack of standardised criteria, market opacity and the onerous management process for risk departments mean that many market participants have historically not accepted ETFs as collateral.

“Our lists aim to bring transparency and simplicity to the market, facilitating access to ETFs for use as collateral. “