BlackRock and Euroclear team up to ‘reform’ ETF settlement

ETFsBlackRock and Euroclear Bank have issued what they say is the first iShares exchange-traded fund (ETF) with an international security structure.

The two bodies say this will “reform” ETF processing and settlement across Europe.

Cross-exchange listed ETFs in Europe are issued, traded and typically settled in national central securities depositories (CSD) of the exchange where the trade is executed.

In a statement, the two firms say the new ETF will be issued and settled for the first time in an international CSD - Euroclear Bank.

“[It] often causes inefficiencies when ETFs are traded across borders,” the statement says. “By using a single European settlement location, it is expected the new international ETF structure will improve trading liquidity, ease cross-border ETF processing and significantly lower transaction costs for investors.”

The pilot programme will launch in the coming months. If it is completed successfully, it is likely additional ETFs will be issued using this international security structure.

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