Capturing the Value of ETFs

Y O U R C O M P L E T E S O L U T I O N

Capturing the Value of ETFs

Y O U R C O M P L E T E S O L U T I O N

The ETF RevolutionIn a world quickly moving toward passive investing, the appetite for exchange-traded funds is sharply increasing. Indeed, while the traditional active allocation approach is failing to hold market share, the economic and performance advantages that ETFs deliver are making a deep impact on market structure, regardless of asset class.

The growth of ETFs is truly international. In July 2018, assets invested in ETFs and exchange-traded products (ETPs) listed in Europe reached US $828 billion, and in the past decade alone, EUR 426 billion flowed into European ETFs and ETPs.1

So, what’s the attraction for investors? Low fees, consistent liquidity, the ability to diversify risk in a portfolio and preferential tax treatment versus mutual funds are key reasons why ETFs are flourishing.

For issuers, the opportunity to attract and retain funds is a compelling option, but there are many considerations to rolling out a successful ETF.

As one of the world’s largest custodians, with more than $400 billion of ETF assets, we can support your entire ETF workflow — delivering even greater operational and cost efficiencies.

So regardless of your requirements, if we’re not helping you already, perhaps it’s time for us to start.

European ETF and ETP Asset Growth

1 Source: etfgi.com2

900

800

700

600

500

400

300

200

100

0

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

2004

116

117

34

35

YEAR

# ETFs

# ETFs/ETPs

ETF assets

ETF/ETP assets

2005

168

170

57

58

2006

277

309

94

96

2007

427

508

132

138

2008

643

862

143

152

2009

873

1,115

226

245

2010

1,079

1,600

281

313

2011

1,229

1,796

268

300

2012

1,332

1,934

331

369

2013

1,392

2,007

395

418

2014

1,477

2,110

438

458

2015

1,546

2,197

487

505

2016

1,549

2,210

542

573

2017

1,590

2,240

762

802

JUL-18

1,675

2,320

788

828

ETF Assets

ETP Assets

#ETFs

#ETPs

AS

SE

TS (U

S$

Bn) #

ETFs/E

TPs

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A Complete SolutionAt BNY Mellon, we understand all aspects of ETFs, so whether you are an issuer looking to build a fund, or an investor or sponsor looking to better manage your ETF portfolio, we can assist.

By combining the end-to-end capabilities of a global ETF service provider with the support you need for all your operational requirements, our team can help you drive efficiency, reduce risk and enhance performance.

What’s more, you can take advantage of the full range of BNY Mellon services: FX, Collateral Management, Securities Finance and much more.

DesignBuild your ETFs

TradeAccess liquidity in over 10,000 global ETFs, portfolio trading and rebalance counterparties

Securities FinanceLend and borrow assets

through our agent lender

Collateral ServicesUtilize your ETF portfolio to meet margin requirements

ServicingCustody, fund accounting and administration

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For ETF Servicing: A Complete Solution

ServicingCustody

Fund accounting & administration

Counterparty reconciliation

Transfer agency

Middle office

Basket composition file production

Trustee services

TradeETF cash sweep

Lending ETFs and underlyings

ETFs as collateral

FX trading, hedging and margining

DesignBuild your ETFs

Securities FinanceLend and borrow assets

through our agent lender

Collateral ServicesUtilize your ETF portfolio to meet margin requirements

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Smarter ETF Servicing The cornerstone of a robust and secure ETF servicing model is superior fund administration.

We established our fund administration business in Ireland in 1994. At the time, we were primarily servicing clients who had aspirations to establish collective investment schemes under the evolving UCITS regulations, for distribution throughout Europe.

The growth of BNY Mellon's ETF servicing business mirrored the growth of Ireland as a destination for global asset managers and the success of the UCITS platform.

Today, we are one of the largest fund administrators in Ireland, servicing over $1 trillion in client assets and looking after a broad range of fund types including:

• Exchange-Traded Funds

• Fund of Funds & Fund of Hedge Funds

• Money Market Funds

• Master Feeder Funds

• Asset Pooling Funds

• Multi-Manager Funds

• Separately Managed Accounts

• Private Equity Funds

• Alternative Investment (Hedge) Funds

• Open or Closed-End Funds

• Multi-Currency & Hedged Share Classes

So what makes servicing your assets at BNY Mellon different?

• ETF-specific technology: Focused on internal controls and reporting, we provide technology solutions that manipulate index and portfolio data to ease the PCF creation process.

• Truly Global Support providing ETF servicing right around the world, with an operating model built to be global, from the ground up.

• Our AP Online portal is being used by a large portion of the Authorized Participant community. We also offer specific technology to help streamline and control the assessment of the cost of basket preparation for APs.

• Our automated share class hedging platform meets your FX hedging needs, and is supported by a dedicated team of FX professionals.

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Creating and Launching a FundFrom strategy through origination and beyond, our ETF Solutions team will be by your side, helping you get your products to market quickly and efficiently.

At BNY Mellon, we have the expertise and scale to handle any ETF situation, regardless of how complex. With a market-leading technology platform and a team of ETF experts on hand, we will help streamline your workflow and provide support to better manage resources, access the right liquidity pools and meet your business goals.

Creation1

We provide guidance and the consultation needed to help you launch a wide range of ETF products, and can help you build relationships with key market participants.

Meeting Your Goals

Our ETF team will assist as you work through concepts as diverse as proper creation unit size, sampled-index size and appropriate number of constituents, country alternatives and product structure.

Independence and Experience

We have a large and experienced ETF team that is not dominated by proprietary products or a single large ETF issuer. This means that our deep bench can provide you with the impartial attention you need to launch your fund within your specified timeframe.

Benefits2

One of the benefits of working with BNY Mellon is our ETF Advisory Council, which provides advice and insight to ETF issuers through an experienced panel of market professionals.

1 Offered through BNY Mellon Capital Markets LLC2 Offered through BNY Mellon Asset Management and BNY Mellon Capital Markets LLC

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For ETF Issuers: A Complete Solution

TradeAccess liquidity in over 10,000 global ETFs, portfolio trading and rebalance counterparties

Securities FinanceBorrow ETF assets

Lend ETF assets

Earn incremental yield

Collateral Services

Initial Margin segregation

Collateral administration

Triparty & Third Party collateral management

ServicingCustody, fund accounting and administration

DesignPrelaunch model and design consultation

ETF Advisory Council

Custom index development

Authorized Participant introductions

Exchange listing coordination

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All Your ETF Needs Taken Care Of

Advice on Creating an ETF?

Our ETF Advisory Council provides consultation on the construction of new funds

Require Operational Support?

We can help with all your back office requirements

Looking for Basket Creation Capabilities?

We can build and disseminate ETF baskets on your behalf — an important consideration as your product grows and expands beyond the Authorized Participant community.

Need FX Hedging Administration?

Gain access to both our automated solution as well as a global team to support a passive rules-based program for ETF hedged share classes.

1.

3.

2.

4.

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Beyond ETFsWhile BNY Mellon can support all your traditional ETF needs, there are many other ways we can work together to streamline your trading, collateral, funding and liquidity activities.

Securities Lending

As the world’s leading securities financing franchise, we can help extract value from your ETF holdings, by lending securities out to enhance returns, source liquidity or enable you to borrow securities.

Liquidity

Maximize liquidity and access cash with our leading technology solutions, including Margin DIRECT SM for enhanced customer protection and Liquidity DIRECT® for real-time access to money market and mutual funds.

Collateral Services

We can help you move your collateral where you need it, when you need it with our collateral management solutions. Meanwhile, our collateral segregation services provide the safety of segregated accounts, helping to mitigate counterparty, market and operational risk.

Fixed Income and Equities1

Unlike some of our competitors, we’ve got a full-service capital markets trading division, enabling you to execute a comprehensive range of fixed income and equity products. With a dedicated ETF market-making desk to complement these services, access to liquidity shouldn’t be an issue.

FX Execution

If you’re involved in cross-border flows, or have any foreign currency exposure, we can assist. With a growing FX presence, BNY Mellon can provide for all of your currency trading needs.

1 Offered through BNY Mellon Capital Markets LLC

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Jeff McCarthyJeff McCarthy is the global head of Exchange Traded Funds and responsible for leading and executing the long-term strategy to drive growth in BNY Mellon's ETF business. As part of this mandate, he plays a critical role in the successful enterprise-wide delivery of comprehensive ETF solutions to the marketplace, and works to further develop long-lasting partnerships for BNY Mellon in the ETF industry.

JC MasJC Mas is Head of ETFs and Portfolio Trading at BNY Mellon Markets. He is responsible for the secondary trading of ETFs and their constituents on behalf of our clients. JC has more than a decade of experience trading ETF products and spent five years on the desk at Barclays Capital before joining BNY Mellon in 2012.

Bob HumbertBob Humbert is director of ETF Strategy and Solutions for BNY Mellon focusing on driving global growth in BNY Mellon's ETF business. As part of this mandate, he plays a critical role in the enterprise-wide delivery of comprehensive ETF solutions to the marketplace, and works to further develop long-lasting partnerships for BNY Mellon in the ETF industry. Prior to joining BNY Mellon, Bob was a director of Exchange Traded Product Listings & Trading at Nasdaq, where he led the strategy and business execution of Nasdaq’s Exchange Traded Product Listing business.

Thomas PorrazzoTom is a Managing Director at BNY Mellon and currently heads Client and Relationship Management for our Structured Products business, which includes ETFs, closed-end funds and UITs. Tom has over 25 years in the asset servicing business with a background in running both Client Management and Operations. Tom has been part of the ETF business at BNY Mellon since 2004. As head of ETF Operations and Client Services, Tom helped lead the expansion of the business at BNY Mellon from just 12 funds to over 700 funds and over $500 billion in assets. Tom led the build out of our ETF infrastructure and service model. During this time, BNYM Mellon showed a record of innovation and industry firsts, including the launch of the first actively managed ETF.

Meet the TeamBNY Mellon’s global ETF business is managed by an array of experienced professionals who have worked across all aspects of the business. The team members below represent just a handful of more than 100 professionals dedicated to providing superior strategy, execution, support and service.

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Contact UsFor more information about our complete ETF Solutions, contact your relationship manager or email ETF@bnymellon.com. For trading-specific inquiries, email ETFtrading@bnymellon.com.

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Scott CoeyScott is responsible for managing the business development team for our hedge fund and structured product business. Prior to joining Alternative Investment Services, Scott was EMEA head of Broker-Dealer Services (BDS) at BNY Mellon. In this role, Scott managed the Pershing and BNY Mellon BDS relationship management and business development teams and oversaw the strategic development of all EMEA broker-dealers solutions.

Robert RusheRob leads and executes BNY Mellon’s strategy for long-term regional growth in its ETP investment servicing business, and delivers enterprise-wide, full-lifecycle solutions to fund sponsors in EMEA. He has more than 20 years’ experience in the funds industry and was responsible for building the asset servicing model for Europe’s first ETFs in 2000. Rob joined BNY Mellon in 2017 from State Street where he was head of their ETF servicing business.

Tony O'BrienTony is responsible for the growth and development of BNY Mellon's funds business and servicing capabilities. He specializes in developing and defining servicing requirements for new products across all of BNY Mellon's Irish asset servicing capabilities. He has been instrumental in the growth of BNY Mellon’s EMEA business, advising clients on fund structuring, operating model development, regulatory issues and distribution support, with a particular focus on ETFs.

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