The six new ETFs were offered to existing investors in the corresponding six Merrill Lynch-sponsored HOLDRs through separate exchange offers. This transition from HOLDRs is a first for the ETF industry, noted Joseph Keenan, managing director and global head of exchange-traded fund services at BNY Mellon Asset Servicing, adding that it illustrates the continuing changes in the ETF investment segment.
HOLDRs are Holding Company Depository Receipts, securities that represent an investor’s ownership in the common stock or American Depository Receipts (ADRs) of specified companies in a particular industry. They are designed to offer investors a way to achieve exposure to a basket of stocks in a cost-efficient manner while preserving ownership benefits, such as voting rights, related to the underlying stocks, according to ETFdb.
“The ETF structure provides a more dynamic, diversified investment vehicle as it better reflects changes in the composition of industry sectors that inevitably occur over time,” said John Crimmins, VP, portfolio administration at Van Eck. “This was a unique transaction, and we are pleased that BNY Mellon had the expertise and depth of service required to assist investors who transitioned from the HOLDRs to the ETFs.”
BNY Mellon’s Depositary Receipts group has acted as the trustee for the HOLDRS baskets since the inception of the product in the late 1990s. BNY Mellon Shareowner Services was the exchange agent for the six exchange offers.