Northern Trust is set to launch services for exchange-traded funds this year as ETF growth is expected to continue and other mutual funds look to enter the space.
Phil Nanof, head of ETF Services, America at Northern Trust joined the firm in December 2024 to build new capabilities. Northern Trust already offers ETF services in Europe and Asia Pacific so Nanof told Markets Media that this is an extension of what the firm does “very well” today.
Phil Nanof, Northern Trust
He told Markets Media: “We are investing heavily in building asset structures to support the unique features of US ETFs.”
Nanof says ETFs continue to benefit from strong infrastructure and regulation. Assets invested in US ETFs reached a record $14.3 trillion at the end of February this year, surpassing the previous high of $13.9 trillion in January 2026, according to ETFGI, an independent research and consulting firm. In February this year revenue was $192.3bn, bringing year-to-date revenue to a record $359bn.
“There is a lot of innovation with over 1,000 ETFs launched last year in the US and there is no sign of this slowing down,” added Nanof.
Source: ETFGI
Northern Trust’s strategy for launching US ETF services is to support existing clients as they grow into ETFs. They want to use the same service model and operational discipline that they trust, according to Nano. He said the business has a lot of conversations with existing asset management clients who are not yet in the ETF space.
“Our timeline, in terms of survival, is based on our customers’ ability to prepare,” Nano said. “I hope we will be live in the US in the third quarter.”
ICE ETF Hub
In March of this year Northern Trust said in a statement that it had entered into an agreement with Intercontinental Exchange to use the ICE ETF Hub as an order-taking platform for its US ETFservicing capabilities.
The ICE ETF Hub provides secure, scalable technology that facilitates the operation of the primary ETF market and connects directly with authorized participants, market makers, brokers, and other key stakeholders in the ETF environment.
Creating and redeeming ETFs requires negotiating large baskets of investments between issuers, authorized participants and market makers. Historically, traditional communication processes were highly directional with market participants using a combination of phone, email, chat or spreadsheets to agree on baskets. The need to manually copy and paste data led to errors and made the process very time consuming.
Peter Borstelmann, ICE
Peter Borstelmann, president of ICE Bonds, said in a statement: “Following the playbook that ICE has used since it created the market migration from analog to digital, ICE ETF Hub, with more than $5 trillion in assets to be handled from the beginning, was designed to standardize and automate the ETF production and redemption process to provide efficient work and ETF connections.
Nanof described the integration of the ICE ETF Hub as an important part of the US ETF’s service strategy. He said the partnership is an important step to put Northern Trust’s end-to-end ETF service solution covering fund management, custody and transfer department.
“Partnering with ICE gives us instant scale, reliability and connectivity across the region,” he added. “This wouldn’t have been an option 10 years ago, but ICE has done a great job of partnering with other ETF service providers, especially those that have allowed participants to set up a core fund quickly.”
Growth prospects
Northern Trust’s asset management clients listen to their investors who want to get their strategies, especially active strategies, through ETFs. “More than 80% of ETFs launched last year were actively managed, so there’s no better time to do this,” Nanof said.
The 2026 Global ETF Investor Survey from financial services group BBH found that two-thirds, 66%, of investors prefer active management over passive in the next 12 months. Almost all, 94%, think active ETFs will reach $10 trillion in assets within 10 years, which equates to an annual growth rate of 20%.
In March this year Dimensional Fund Advisors has created the US Micro Cap ETF, the first actively managed US ETF. The US ETF is a subset of the firm’s first fund, the US Micro Cap Portfolio, which began as a mutual fund in 1981 using a systematic approach to investing in the smallest stocks in the US.
“The launch of the ETF category for mutual funds in the United States also means that we are in a better position to meet and anticipate the needs of customers,” added Nano. “We are doing this at a time when mutual funds and ETFs are converging so that we can create a type of support that is compatible with this convergence.”
Source: BBH
Nanof acknowledged that Northern Trust is entering a competitive market for US ETF services. For example, State Street was appointed as the service provider for the Dimensional Fund Advisors ETF’s share class structure. He claimed that Northern Trust’s the differentiator is its customer-oriented approach.
“There’s a tried-and-true playbook for latecomers, which is making the right investments, hiring experience and building something that customers are asking for, that’s what we’re doing,” he said.
Northern Trust is creating a team in Boston, which Nano says has valuable ETF experience that complements existing service teams and relationships as clients seek common practices, simplification, governance and oversight. He added: “We are a SWAT team of ETF experts.”
The business believes there are opportunities with asset managers in the $2bn to $20bn region who may be looking for differentiation and a better customer experience. Although the group is focused on the US, Northern Trust will look for ways to harmonize its global processes and technologies.
“This was a great opportunity to build something new to address the scale and complexity of the US ETF market,” added Nano. “Once we demonstrate our expertise with customers we will be able to compete more globally, and more sophisticatedly, from operators looking for a single service provider.”
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