BlackRock, owner of exchange traded fund provider iShares, is looking to launch an ETF with an international security structure in a bid to help establish a single market for products across Europe.
Currently, all cross-exchange listed ETFs in Europe including iShares ETFs are issued and traded on one or more national stock exchange and are settled in the national central securities depository of the exchange where the trade is made. But this system, according to BlackRock, can lead to inefficiencies due to complex and labour-intensive post-trade processes.
The planned iShares ETF will be issued and settle for the first time in a international CSD, trade settlement operation Euroclear Bank.
By using a single European settlement location, BlackRock says the new international ETF structure will improve trading liquidity, ease cross-border ETF processing and significantly lower transaction costs for investors.
iShares global head Mark Wiedman says: “In order for the European ETF market to reach $1trn in the next three to five years, the entire market ecosystem must become more efficient for investors.”
Informed Choice managing director Martin Bamford says: “This move looks like a positive step for investors, as it should lower trading costs and make ETF investing more efficient.”