Over the past few weeks, I’ve had the pleasure of travelling across Asia Pacific, stopping in Sydney, Taiwan, and Hong Kong, to meet with clients and partners and speak about a topic that’s fast becoming the cornerstone of investment innovation in the region: ETF servicing.
At each stop, the message was clear: the ETF market isn’t just growing, it’s transforming. And as ETFs evolve to include more active strategies, thematic exposures, and increasingly complex underlying assets, the infrastructure supporting them must evolve in tandem. That’s the focus of our work at Calastone, and it was the central theme of my discussions throughout this trip.
A Region in Acceleration
What struck me most in each market, despite their differences, was a shared appetite for efficiency, automation, and greater transparency in the ETF primary market. In Australia, we’re seeing record growth. The market has surpassed A$250 billion in assets under management and continues to climb, fuelled by rising retail participation and a steady stream of product innovation, particularly in active ETFs.
In Taiwan and Hong Kong, it’s a different flavour of growth. In Taiwan, leveraged and structured products dominate, while in Hong Kong, the conversation is increasingly shifting toward the infrastructure needed to support cross-border and T+1 settlements. Yet across the board, one thing is consistent: market participants are confronting growing complexity and recognising that legacy infrastructure is no longer sufficient.
The ETF Primary Market: Still Manual, Still Fragmented
While the ETF secondary market has long been praised for its transparency and automation, the primary market remains a source of friction. From order entry to settlement, the process is often hampered by manual workarounds, email-based communications, and overnight batch processing. For trades worth hundreds of millions, this simply isn’t good enough.
The ETF ecosystem, spanning issuers, authorised participants (APs), custodians, and fund accountants, is still reliant on infrastructure that was originally built for mutual funds, not ETFs. These systems are being stretched well beyond their original remit, and that strain becomes particularly visible when products increase in complexity.
What We’ve Built at Calastone
At Calastone, we’ve developed a purpose-built ETF Servicing platform designed to address these inefficiencies. It’s not a repurposed mutual fund system, it’s a new, cloud-native platform built specifically for the needs of ETF primary market participants. And it’s built around three core design principles: connectivity, visibility, and scalability.
At the heart of the platform is a real-time, automated workflow that supports every stage of the ETF lifecycle, from PCF intake to order capture, NAV-based pricing, actual cost calculation, AP confirms, and settlement. All of this happens in an environment with real-time data sharing across stakeholders.
For example, as APs place orders, those orders are tracked live through the system. Issuers and service providers can monitor the booking of underlying trades, FX rates, and settlement progress, all in real time. There is no need to wait for a contract note to show up. Everyone involved has immediate visibility, which improves liquidity, reduces risk, and cuts down on operational costs.
Why This Matters to the Region
In Sydney, we shared a demo of this system, showing how orders could be fully automated, with full transparency and control. This resonated strongly with attendees – from asset managers preparing to enter the ETF space to established players struggling with capacity constraints.
In Taiwan and Hong Kong, the same challenges apply, albeit with regional nuances. In Hong Kong, cross-border T+1 exposure means APs night have to fund trades before receiving cash, increasing costs and settlement risk. In Taiwan, the growth in complex, leveraged ETFs and the upcoming introduction of active ETFs demands greater automation and standardisation than ever before.
Everywhere we went, the feedback was consistent: service providers, APs, and issuers are ready for change and many are already taking steps to modernise. But the key is collaboration. No one stakeholder can fix this alone.
Looking Ahead
ETF growth is showing no signs of slowing down. In Australia alone, projections suggest the market could hit A$400–500 billion in the next few years, with an explosion of new product launches. That’s exciting, but it also places tremendous pressure on the supporting infrastructure. If we don’t address the inefficiencies in the primary market, we risk bottlenecking growth and damaging investor outcomes.
Our goal at Calastone is to ensure that doesn’t happen. By providing an automated, scalable and real-time servicing platform, we aim to empower issuers, APs, and asset servicers to deliver better outcomes – for themselves, and for the investors they serve.
