Markit makes its ETF mark with big market players
07 December 2015 New York
Image: Shutterstock
BlackRock, BNY Mellon and State Street have approved Markit鈥檚 exchange-traded fund (ETF) collateral lists for use in their collateral management schedules.
Markit鈥檚 ETF collateral lists support the securities lending industry by identifying which equity and fixed income ETFs to accept or post as collateral.
Tim McLeod, director of securities lending and finance at BlackRock, commented: 鈥淩emoving 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.鈥�
Maurice Leo, senior managing director, securities finance at State Street, added: 鈥淲e believe Markit鈥檚 ETF collateral lists should facilitate greater adoption of ETFs as collateral by creating a recognised universe of ETFs that streamline trade execution and the collateral management processes for all parties.鈥�
鈥淭hese equity and fixed income lists will extend the universe of ETFs that State Street has historically accepted under its risk management policy.鈥�
Markit鈥檚 ETF collateral lists are created using standardised filtering criteria, including geographic exposure, holding type and assets under management.
Markit applies a seven-tier filter to more than 6,000 global exchange-traded products to create lists of equity and fixed income funds that meet generally acceptable criteria for use as collateral.
Market participants can reference these lists in collateral schedules, streamlining assessments of fund characteristics and simplifying reviews of collateral eligibility by risk departments.
Pierre Khemdoudi, managing director of securities finance at Markit, said: 鈥淎 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.鈥�
鈥淥ur lists aim to bring transparency and simplicity to the market, facilitating access to ETFs for use as collateral.鈥�
Markit鈥檚 ETF collateral lists support the securities lending industry by identifying which equity and fixed income ETFs to accept or post as collateral.
Tim McLeod, director of securities lending and finance at BlackRock, commented: 鈥淩emoving 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.鈥�
Maurice Leo, senior managing director, securities finance at State Street, added: 鈥淲e believe Markit鈥檚 ETF collateral lists should facilitate greater adoption of ETFs as collateral by creating a recognised universe of ETFs that streamline trade execution and the collateral management processes for all parties.鈥�
鈥淭hese equity and fixed income lists will extend the universe of ETFs that State Street has historically accepted under its risk management policy.鈥�
Markit鈥檚 ETF collateral lists are created using standardised filtering criteria, including geographic exposure, holding type and assets under management.
Markit applies a seven-tier filter to more than 6,000 global exchange-traded products to create lists of equity and fixed income funds that meet generally acceptable criteria for use as collateral.
Market participants can reference these lists in collateral schedules, streamlining assessments of fund characteristics and simplifying reviews of collateral eligibility by risk departments.
Pierre Khemdoudi, managing director of securities finance at Markit, said: 鈥淎 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.鈥�
鈥淥ur lists aim to bring transparency and simplicity to the market, facilitating access to ETFs for use as collateral.鈥�
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