“Increased requirements from the Office of Foreign Assets Control (OFAC) to ensure all funds are screened for sanctions has added another layer of complexity for market participants with regards to their “sanctions compliance”.
The heightened sanctions scrutiny is forcing banks, asset managers, and wealth managers to have transparency into all types of indirect investment vehicles, including ETFs.
SIX is addressing these needs by creating a new module to provide a broad analysis of the constituent securities of ETFs and access to daily sanctions data for most major regimes. This helps to minimize the risk level and protect market participants from compliance breaches or investment strategy misalignments, while also protecting the portfolio value should the sanctioned securities contribute to an impact on liquidity and devaluing of the ETF.
ETF sanctions screening powered by ULTUMUS
The SMSS service brings together vast amounts of securities information, plus analysis of sanctioned entities and sanctions regimes for pre- and post-trade screening. The ETF analysis module leverages the capabilities of ULTUMUS, one of the largest ETF calculation houses in the world which was acquired by SIX in July 2021.
ULTUMUS, offering global composition data and providing risk assessment, has expanded the data coverage available to clients across passive funds, having reached 97% of the global ETF market (close to 10,000 ETFs).
Thanks to its subsidiary, SIX now covers the value chain from listing and trading to data and analytics delivery, having become a leader in the Financial Market Infrastructure (FMI) ETF sphere.
Oliver Bodmer, Senior Product Manager, Financial Information, SIX, commented: “Increased requirements from the Office of Foreign Assets Control (OFAC) to ensure all funds are screened for sanctions has added another layer of complexity for market participants with regards to their “sanctions compliance”. As a result of this new development, the SIX service now tracks and monitors ETFs, in addition to equities, bonds, structured products and options, to enable compliance with global regulatory jurisdictions and safeguarding our clients against compliance and portfolio risks.”