SEI has announced that it supports authorised participant trading for over 300 Exchange Traded Funds. This operational outsourcing business represents 53% of the US ETF market. Instrumental in SEI’s order-taking process is its straight-through-processing platform. The platform is designed to create increased levels of efficiency and transparency by connecting the APs, sponsors, distributor, custodians, and transfer agents in one straight-through electronic process.

SEI’s system creates a centralised location for submitting and reviewing ETF creation and redemption transactions, while significantly increasing the speed and convenience of order entry. With this system, orders that were typically manual are now automated, processed in a controlled environment, and can be completed in seconds. Order affirmations are received electronically almost instantaneously, without the need for manual validation of the transaction. The system also enables new levels of flexibility for users, allowing participants to easily replace an order prior to cutoff times and access their historical records.

Another benefit of the electronic system is the increased transparency it gives to sponsors. Rather than waiting until the end of the trading day to understand their market positions, sponsors can now log in throughout the day to monitor their activity and obtain a more accurate snapshot of their business activity on a continuous basis.

“SEI’s ETF processing platform is an important advancement in the technology that supports our business and the ETF industry in general,” said George Pereira, Senior Vice President of Charles Schwab Investment Management, SEI’s latest ETF client. “By reducing order processing time and by increasing transparency, SEI improves the efficiency, effectiveness, and experience of Schwab and our AP trading partners. This new platform is an example of the innovation that SEI is known for and is a testament to their market leadership.”

Eminating manual intervention, SEI’s processing platform employs multiple checks and balances related to the size of the order and the fund symbol to prevent erroneous trades and other errors from occurring. Fund parameters and exceptions set by the sponsors are incorporated into the system and automatically assist the AP with the trade input. Orders are also acknowledged through an instantaneous PDF affirmation, followed by an electronic confirmation process.

“With the growth of the ETF sector this decade, it was clear that a more sophisticated, flexible, and convenient processing system was needed,” said John Alshefski, Senior Vice President, SEI’s Investment Manager Services division. “As the leader in the space, we have been investing the time and capital necessary over the past several years to build a better platform, not only for the benefit of sponsors, but also for the over 40 APs with whom we have relationships. The ETF marketplace has also been evolving, and our expertise has allowed us to support a widening array of index products, including ’40 Act, ’33 Act, and long-short ETFs. We’re excited to be a catalyst for positive change and to provide ETF sponsors with innovative capabilities.”

In addition to AP processing, SEI’s ETF outsourcing solution includes fund administration, accounting, investor servicing, and distribution support globally through its US and European locations.