Bats Chi-Ex Europe, a pan-European equities exchange based in London, has listed its first exchange-traded fund (ETF) that settles in a single European location.
Euroclear Bank, an international central securities depositary, provides the settlement engine.
The ETF – the iShares MSCI USA Dividend IQ Ucits ETF – has an international securities structure, which allows the fund to be settled in a single place rather than on a national central securities depositary where the fund is traded.
Euroclear and iShares say the listing marks a further step forward in the two firms’ efforts to streamline ETF trade processing and settlement in the European market. They launched their first ETF with an international securities structure on the London Stock Exchange in December last year.
Settlement in national central securities depositaries causes inefficiencies in cross-border transactions and can push up costs and widen spreads.
It is expected that using a single European settlement location and an international structure will improve liquidity and ease cross-border processing by removing the need for realignment of positions between CSDs for settlement purposes. This should also significantly lower overall costs and risks for investors.
Bats Chi-X Europe became a ‘registered investment exchange’ a year ago, meaning the full universe of retail and institutional investors can access its market.
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