Markit’s ETF collateral lists support securities lending professionals in identifying which equity and fixed income ETFs to accept or post as collateral. The lists are derived using standardised filtering criteria, including geographic exposure, holding type and assets under management.

Tim McLeod, director of securities lending and finance at BlackRock, said: “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. We are very supportive of the efforts Markit has made to date and feel this user-friendly solution will benefit market participants and investors." Brian Staunton, managing director of collateral services at BNY Mellon Markets Group, said: “The adoption of Markit’s ETF lists enables our clients to utilize this asset class as collateral in a more efficient way.”

Maurice Leo, senior managing director, securities finance at State Street, said: “We believe Markit’s 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. These equity and fixed income lists will extend the universe of ETFs that State Street has historically accepted under its risk management policy.”

Pierre Khemdoudi, managing director of securities finance at Markit, said: “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.”

Markit applies a seven-tier filter to more than 6,000 global exchange traded products (ETPs) to create lists of equity and fixed income funds that meet generally acceptable criteria for use as collateral. Market participants can easily reference these lists in collateral schedules, streamlining assessments of fund characteristics and simplifying reviews of collateral eligibility by risk departments.