News has been formally announced that Citi is taking a stake in European white labelling firm, HANetf, and simultaneously launching its Citi Velocity offering for the UCITS European ETF industry.
Andrew Jamieson, Global Head of ETF Product and Citi Velocity ETFs, explains that Citi had the choice to build everything for ETFs in-house but elected to build a new partnership with HANetf to launch, list and run the Capital Markets element of their new ETF Issuance business.
“In simple terms we have one of the broadest end-to-end enterprise-wide ETF servicing capabilities and that’s across our Markets division where we are an authorised participant, we trade underlying securities, we are a swap counterparty and a leading FX house for currency hedging or managing different currency shares classes. We are also a leading asset servicing business offering custodian and administrator services plus fund accounting, so we have a full array of asset and market trading services for an ETF issuer but we are not an asset manager or ETF Issuer ourselves, so we can work agnostically with an aspiring ETF issuer without any conflict of interest.
“That puts us in a unique position in the marketplace, so issuers have the confidence in speaking candidly around their own aspirations and investors look to us to guide them around an increasingly complex ETF landscape.”
The new Citi Velocity platform comes because, Jamieson reports, there has been a significant increase in clients who have wanted to enter the ETF space and Citi is able to offer a platform solution that does not compete with them in that space.
“The recent announcement is a combination of years of ongoing planning and discussions with HANetf and it gives us exclusive access to their expertise within the white labelling space and to deliver a best-in-class solution for large global asset managers with complex needs,” Jamieson says. “Citi Velocity ETFs is a refreshing new approach – a one stop shop and only full-service provider of scale.”
Jamieson observes a technology transfer in the asset management community, moving from mutual funds to ETFs. “All asset managers will have to have an ETF capability,” he says. “ETFs are no longer passive products or a quirky niche offering – rather this will become core for all asset managers and all of them are now scrambling to deliver an ETF solution.
“The common theme is that most don’t have the requisite inhouse expertise or resources or the investment dollars to spend. They also don’t have the time to build organically, as it’s a long complex project, so a third-party solution is ever more important.
“Many are unwilling to outsource something as strategic as this to small independent players. They want global firms that can deliver the type of service they need. People underestimate the complexity of connecting into a platform. Only a firm like Citi, with decades of experience connecting to various industry OMS, can do all the plumbing to create a seamless process for the manager.”
The current Citi Velocity launch is purely focused on the UCITS marketplace but Jamieson says: “That’s not to say it won’t develop on a global basis in the future but Europe is the hot spot for opportunities currently.”
He gives three reasons for that: US manager who have an existing US ETF business and want to ‘globalise’ into Europe; European clients who have no existing ETF capabilities who are seeing the US firms arriving in Europe and becoming their competitors and global managers outside of Europe and America in the Middle East, Australia or Asia who see the UCITS wrapper and choose that over building their own local product.
“Europe is the epicentre of global demand which is why we are focused here,” he says.
The new platform is not live yet, but Jamieson hopes to see new products launching later in the year and reports ‘a healthy pipeline of interest’.
newETFs.io respects the hard work of others and gives all credit to the remarkable folks at ETFexpress.com. This excerpt/article was pulled from their RSS feed; click here to view the original. Please note that on occasion, the RSS feed will not have the author. When this happens this site defaults the author to "News". Make no mistake, this excerpt/article was not created by newETFs.io, it was simply shared with you.
