Northern Trust will connect its operations, servicing, and data products to BlackRock’s flagship Aladdin platform, the Chicago-based firm announced Thursday.
For BlackRock, this is the latest in a string of partnership announcements: Earlier this year, the firm announced it will work with BNP Paribas on a similar servicing deal. BlackRock also announced a new partnership with Microsoft to offer Aladdin on the technology company’s cloud platform.
Aladdin, short for Asset Liability and Debt and Derivative Investment Network, is a software tool that’s widely used by institutional investors to keep track of their portfolios. Northern Trust is another industry heavyweight, with $10.9 trillion in assets under custody or administration, and $1.1 trillion in assets under management as of March 31.
The partnership connects Northern Trust’s fund accounting and administration, asset servicing, and risk and IT capabilities to BlackRock’s Aladdin platform, the announcement said.
“With Covid-19 occurring, and the asset values going down, the marketplace is going to be focused on efficiencies,” Peter Cherecwich, president of asset servicing at Northern Trust, said by phone Thursday. “If you look at Aladdin and BlackRock, there are a lot of users out there. What this does is helps our clients who use it get more efficient.”
For example, if an asset manager that works with Northern Trust already has access to Aladdin, the data stored in Aladdin can now be integrated into Northern Trust’s servicing products. That means Northern Trust can “deal with any reconciliation breaks, the ability to get transactions to flow through the system,” said Cherecwich.
“It’s more efficient for all parties involved,” he added.
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According to Cherecwich, BlackRock and Northern Trust have been working together for years. Northern Trust’s asset management arm uses Aladdin, and BlackRock is an asset servicing client. He added that the two firms often have joint clients that use Aladdin along with Northern Trust’s custody and administration services.
“We’re a client, servicer, and a partner servicing a third-party client,” Cherecwich said of the firm’s relationship to BlackRock. “That led us to say we should be working more closely together.”
Both Northern Trust and BlackRock have plans to continue growing. According to Cherecwich, Northern Trust is working on building out its Front Office Solutions, which services asset allocators, rather than managers. The firm is also “looking at other toolkits that portfolio managers may need,” Chercwich said.
Meanwhile, BlackRock has plans to partner with other asset servicers as part of its new Aladdin Provider program, according to Sudhir Nair, global head of Aladdin.
“We are working with several of the largest asset servicers to build a set of standards and commonality to create more data symmetry and make it easier for asset managers to interact with asset servicers,” Nair told Institutional Investor earlier in May. Such partnerships, he said, help provide “interoperability and connectivity.”
—Amy Whyte contributed to this report.