Euroclear today announced the launch by Euroclear France of an automated processing service for Exchange Traded Fund (ETF) transactions in the primary market.
Euroclear France claims to hold a third of European ETFs in custody, and the new service aims to simplify and reduce the cost of processing instructions for the movement of underlying securities in the creation and redemption of ETFs. Euroclear says it expects its new service to accelerate the growth of the ETF market in Europe.
“Thanks to our sophisticated and robust RGV settlement platform, we are the only service provider in Europe to offer automatic processing for the full range of ETF transactions, both in the primary and secondary markets,” explains Jol Mrre, Chief Executive Officer of Euroclear France. “This new ETF service addresses a need for one of the fastest growing segments of the financial markets, while reinforcing our ongoing commitment to offer innovative and client-focused products.”
Euroclear France says the primary market ETF service is capable of handling securities from most markets. Operationally, Euroclear France will receive instructions from both the ETF promoter (or its transfer agent) and the ETF subscriber, and will automatically generate the appropriate settlement instructions for the ETF’s underlying securities. Simultaneous DVP settlement occurs as the subscriber delivers the underlying securities to the ETF promoter (or their transfer agent) and receives the ETF shares in return, or vice versa, on a book-entry basis at Euroclear France.
The counterparties can follow the progress of their transactions, as well as their share and cash account balances, in real time through their RGV workstation or their e-RGV internet terminal.
At the end of 2002, there were 280 ETFs listed on 26 exchanges around the world, of which 118 were listed in Europe. Europe led the market in 2002 in terms of new ETF launches, with 47 new funds, a rate of increase of 66 per cent. ETF assets are estimated at Euros 130.3 billion worldwide, up 24 per cent on the total at the end of 2001. In Europe, the value of ETFs leapt by 91 per cent to Euros 10.7 billion in the same period.