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BlackRock Tanks $2 Trillion Out of State Street

BlackRock will no longer have State Street oversee its exchange traded funds.
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BlackRock  (BLK) - Get BlackRock, Inc. Report is taking about $2 trillion in assets out of State Street's  (STT.PRD)  management, reducing its reliance on outside parties and reducing outside fees. 

State Street has been the sole custodian to all of BlackRock's U.S. exchange-traded funds which combined total about $2.3 trillion, according to the Wall Street Journal.

State Street's custodial duties include maintaining investment records, handling and valuing assets. BlackRock, the world's largest ETF manager, will shift some of the administrative and accounting tasks to Citigroup, JPMorgan and Bank of New York Mellon. 

State Street saw this move coming and earlier this year warned investors that BlackRock would be making this move. State Street said that the portion of BlackRock's ETF business it expected to lose accounted for about 1.5% of its 2020 fee revenue, or $140 million. 

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Last year State Street also said it would need to bring in about $1.5 trillion in new business wins each year to offset client attrition and pressures on fees. 

State Street shares were falling3.2% to $91.84 at last check Wednesday afternoon. BlackRock shares were also down 0.4%.