BlackRock splits ETF servicing mandate across four custodians

BlackRock branchGlobal fund manager BlackRock has announced plans to spread the post-trade servicing of its US-based ETF assets across four global custodians – BNY Mellon, Citi, JP Morgan and incumbent provider State Street.

Citi will be responsible for 40% of the $2.3 trillion iShares portfolio, while JP Morgan will get 30% and BNY Mellon and State Street will both service 15% of the assets.

The migration of assets is expected to begin in the second half of 2022 and will take roughly 18 months.

While the deal relates to BlackRock’s US-based ETF assets, it remains to be seen if a similar move will be made for its ETF assets elsewhere.

The company stated that the due diligence and RFP process for iShares Ireland-domiciled assets is “ongoing” and the outcome will be announced at a later date.

According to BlackRock, the decision to switch from one custodian (State Street) to four “is based on our desire to create a robust operating model for servicing ETFs, which will help us scale the iShares franchise and mitigate concentration risk,” said Derek Stein, senior managing director and global head of technology & operations at BlackRock.

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