The first ETF to come to market in continental Europe using an international security structure, where settlement of transaction will take place at an ICSD, has listed in Amsterdam.
iShares, the exchange-traded funds offering of BlackRock, listed its iShares Euro Stoxx 50 ex-Financials UCITS ETF (EXFN) on the Amsterdam market of Euronext.
Previously, cross-border transactions in ETFs settled in multiple CSDs with related re-alignment costs and risks. With this new international security structure, the iShares ETF will be issued and settled for the first time in ICSD Euroclear Bank. This structure is designed to facilitate cross-border liquidity provision and in parallel reduce operational and trading costs for ETF investment.
The newly listed iShares EURO STOXX 50 ex-Financials UCITS ETF is a physically replicating fund which invests in blue chip stocks from 12 eurozone countries, while excluding companies from the financial sector, potentially providing investors with a less volatile exposure to Eurozone equities. The fund has a total expense ratio of 20 basis points.
Gert-Jan Verhagen, head of iShares Netherlands, commented: “iShares is excited to be the first ETF provider to have an international security settlement structure in continental Europe to list on Euronext. We anticipate that this new structure will enable investors to gain easier access to one of the most dynamic markets while benefitting from reduced costs. This will help us in our ambitions to not only grow the market but also to increase market efficiency for our clients.”
Mo M’Rabti, deputy global head International Markets, at Euroclear said: “Euroclear is delighted to be an integral part of re-shaping the ETF industry in Europe with BlackRock. The aim of the new international structure is to remove historical post-trade fragmentation and re-alignment complexities inherent to trading ETFs on multiple exchanges. We expect to lower total ownership costs for ETF investors while, equally importantly, raising settlement efficiency rates which have been sub-optimal, particularly for cross-border flows.”
Euroclear to Settle Trades in New Eurozone ETF Through ICSD
The first ETF to come to market in continental Europe using an international security structure, where settlement of transaction will take place at an ICSD, has listed in Amsterdam.