The ETF industry continues to grow at an extraordinary pace. As we’ve seen in Calastone’s global and Asia-focused research, the market has crossed $14 trillion in AUM globally, and Asia alone is compounding at over 23% annually. But with that growth comes complexity, especially in the ETF primary market. That was the focus of a recent ETF Stream webinar I had the pleasure of joining, where I was in discussion with Ciaran Fitzpatrick, Global Head of ETF Product Management at J.P. Morgan; Graham Southwell, Senior ETF Capital Markets Specialist at DWS; and Andy Baker, Head of ETF Capital Markets at Janus Henderson Tabula. The session was hosted by Jamie Gordon of ETF Stream.
Together, we explored the evolving challenges and opportunities in the ETF primary market, with a particular focus on automation, standardisation, and operating model transformation. These themes have become a drumbeat across our conversations with issuers, authorised participants (APs), and service providers globally: how do we future-proof ETF servicing for the next phase of growth?
From Fax to FIX: A Market Transformed by Volume
The evolution of the ETF primary market over the past two decades has been nothing short of remarkable. What began as a manual, portal-based workflow, often involving email or even fax, is now moving decisively toward real-time, API-driven automation.
As Ciaran Fitzpatrick and Graham Southwell pointed out, the turning point came with the explosion in trade volumes. Service providers that used to manage 5–10 creation/redemption orders a day now handle hundreds or thousands. That scale demands automation – not just for efficiency, but to enable tighter pricing, minimise operational risk, and create space for increasingly sophisticated trading strategies.
At Calastone, we’ve learned from the mutual fund space that consistency in operating model is the bedrock of scalable efficiency. It’s not about building the flashiest front-end, APs have made it clear they want to use their own OMS and interact via standardised protocols like FIX and APIs. The role of service providers is to enable that, behind the scenes, with flexible and robust infrastructure.
The Portal Isn’t the Problem – Workflow Is
What became clear in the discussion is that while primary market portals are important, they’re just one piece of a much larger puzzle. The real opportunity lies in overhauling the entire post-trade workflow.
Think about the traditional confirmation process. An AP places a trade and then waits until the afternoon of T+1 to receive confirmation. That’s far too late for hedging accuracy, especially in volatile or emerging markets. What APs need is real-time transparency – access to fill data as it happens, enabling better execution and reduced slippage.
This is where Calastone is focused: automating deal capture, confirmations, and tracking the lifecycle of an order in real time. Whether through direct OMS integration, API delivery, or batch processing, the goal is the same – give APs the data they need, when they need it, without requiring them to log into a dozen different systems.
Standardisation: The Industry’s Next Leap
One of the most powerful takeaways from the session was the unanimous call for standardisation. As Ciaran rightly noted, we’re long past the point where having different order types across portals, or custom naming conventions, is sustainable.
The industry needs a common schema – standard order types, naming conventions, and confirmation workflows. The FIX protocol, already widely adopted for secondary market trading, offers a strong foundation. As Graham described, DWS has made its FIX specifications public to accelerate adoption and interoperability.
At Calastone, we fully support this vision. We’re already deploying scalable ETF servicing technology in multiple regions using cloud-native infrastructure that automatically fails over, scales on demand, and integrates with whatever technology our clients use. The future is modular, standardised, and interconnected.
Complexity Is Here to Stay: Be Ready
A recurring theme was the rising complexity of ETF strategies. From options-based and defined-outcome products to fixed income baskets and mutual fund share class conversions, the scope of what the primary market needs to support is expanding fast.
That complexity introduces new risks – reputational, operational, and regulatory. As Andy Baker noted, even the best portal in the world can’t mask an inefficient back-end process. Issuers need to be able to support hedged/unhedged share class switches, custom baskets, derivative components and more, all without compromising turnaround times or increasing settlement failures.
As Ciaran highlighted, the move toward ETF share classes within mutual funds (already gaining momentum post-patent expiry in the US) will only accelerate this trend. Servicing providers will have to manage dual liquidity streams, mixed fee structures, and different pricing rules, all within a single fund. Without a modern infrastructure, that’s a recipe for fragmentation.
T+1: The Industry’s Pressure Test
The global move to T+1 settlement is rapidly becoming the primary catalyst for change in ETF servicing. The challenges are particularly acute in Asia, where APs must often pre-fund trades due to cross-border flows and time zone mismatches. As we explored in our regional research, this is one of the biggest operational risks faced by participants today.
In the European context, as discussed during the webinar, many firms have already made back-end upgrades in anticipation of T+1 adoption. The result is lower fail rates, better coordination between capital markets and distribution, and more efficient management of confirmation workflows.
But this is just the beginning. T+1 isn’t just a regulatory hurdle, it’s a litmus test for operational resilience. Those who pass will be better positioned to scale into new products and markets.
Final Thoughts: Build Once, Scale Globally
The ETF primary market has come a long way, but as the industry matures, the demands placed on infrastructure will only intensify. The path forward isn’t about building more portals or layering on more teams, it’s about re-architecting the operating model itself.
We must standardise the foundation, automate the core processes, and empower APs with transparency and connectivity. Whether you’re an established issuer, a service provider, or a new entrant, the success of your ETF business will increasingly depend on how well your operating model can scale.
At Calastone, we’re proud to be helping drive this transformation. But this is a team effort. It’s time for the ETF ecosystem – issuers, APs, servicers and regulators – to work together to build the infrastructure that the next decade of ETF growth demands.
