BlackRock (NYSE:BLK), the investment manager, has partnered with Euroclear and Clearstream to move 20 iShares exchange-traded funds (ETFs) to an international clearance and settlement platform, according to a Euroclear press release. The move will make cross-border trading with these instruments simpler and more cost-efficient, as well as making spreads more attractive for traders, .
$2.9 billion in assets under management
According to BlackRock, the ETF trades will now be cleared by the two international central securities depositories (ICSDs), which have combined assets under management of $2.9 billion. The US company first started issuing ETFs on an ISCD two years ago, and has now moved all ETFs launched since March to the Euroclear/Clearstream partnership platform.
New platform will simplify trading in fragmented European markets
Europe’s financial markets are a fragmented lot, and clearance and settlement of ETFs that are listed on more than one exchange have to take place in the central securities depository of the trading venue where the transaction was executed. A single point of clearance and settlement will offer investors a much easier time with clearance and settlement.
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iShares is a global provider of ETFs, with more than 700 funds launched since its inception over 10 years ago. The total assets under management of these funds stood at over $1 trillion at end-September 2015. Euroclear and Clearstream are leading European post-trade services providers, catering for trades across asset classes. Clearstream is also the provider of the post-trade infrastructure for the Eurobond market.
ETF trading ecosystem is now of paramount importance
The Global Head of iShares Capital Markets at BlackRock, Leland Clemons, said: “As the global demand for European-domiciled ETFs continues to grow at pace, the ecosystem supporting the industry has never been more important. Our partnership with Euroclear and Clearstream to create a multi-national central settlement and clearing venue for European securities is testament to our commitment to making ETF trading more efficient. We hope to build an industry consensus around this simpler model.”
Commenting on the news, Euroclear’s Global Head of Capital Markets said: “What we are doing is effectively simplifying the European issuance and settlement process for this much sought-after investment product. The huge growth in European ETFs shows no sign of abating, and it is critical that the infrastructure providers like Euroclear have the right platforms and processes in place to manage the increasing volumes. Local CSDs can also provide post-trade services for internationally-structured ETFs via their links with the ICSD, achieving the best of both worlds.”
Clearstream’s Head of Business Solutions at the Investment Fund Services division, Bernard Tancré, said: “But regardless of whether a product issuer uses local CSDs or the centralised ICSD, seamless connectivity is crucial to the user experience, and we are proud to provide this system alongside our domestic issuance model.”