By David Henry

(Reuters) – BlackRock Inc, an asset manager (NYSE 🙂 adds Bank of New York Mellon Corp to its portfolio (NYSE 🙂 Citigroup Inc (NYSE:) and JPMorgan Chase & Co (NYSE:) as U.S. custodians for its iShares exchange-traded funds, diversifying beyond long-time partner State Street Corp (NYSE :).

It is expected that the world’s biggest asset manager will add service providers to the book of Irish business for iShares next year.

BlackRock had already announced its intention to hire custodians. State Street also acknowledged that it intended to transfer a significant portion of its ETF assets from BlackRock to another provider to diversify. State Street anticipated that approximately 1.5%, or $140,000,000 of its fee revenues would be moved by the business.

BlackRock’s iShares ETFs provide the most extensive range of ETFs and have an estimated $3 trillion in assets.

The popularity of ETFs is underlined by the decision to include more service providers. iShares assets, for instance, rose by $1 trillion in the wake of the financial crisis, when investors poured unprecedented amounts into financial markets.

This has led to more banks trying to gain larger parts of the market by offering to service these assets. It is a low margin business, which includes processing trades as well as holding assets. Consumers could see lower fees due to increased competition.

Roman Regelman, BNY Mellon’s chief executive of asset servicing and head of digital, said BlackRock’s move to add service providers is positive for the industry because it adds resiliency, encourages transparency and promotes innovation.

Regelman said he was optimistic BNY Mellon would become a service provider for a substantial portion of the iShares’ European business to be awarded next year. According to him, the business has better margins than U.S. work.

He said that although a proposal has been submitted, they must make a formal determination.