Capita Asset Services and Clearstream - the post-trade services provider of Deutsche Börse Group - have joined forces to establish a more streamlined, efficient and more secure issuance process for Exchange Traded Funds (ETFs) on the German market.
The partnership allows Capita, as registrar and asset managing services business, to open an issuance account with Clearstream and directly mark balances up or down in Clearstream’s books, as required. This will go hand in hand with improved reconciliation procedures applied between the German central securities depository (CSD) Clearstream Banking AG, and Capita, as fund registrar, to enable more secure and efficient cross-border transactions.
The new, more streamlined issuance model, set to go live in Q1 2014, will contribute to meeting market demand for more efficient issuance for ETFs in Europe. According to data from the World Federation of Exchanges, compared to USD 8.17 trillion in the Americas, the volume of ETF trades in Europe was lower at around USD 532.4 billion from January to the end of September 2013. Participants often cite the more fragmented exchange and settlement landscape in Europe as one of the reasons for the much lower global share of the market compared to the US.
Marc Kieffer, Head of Issuance and Distribution Services at Clearstream, stated: “Contributing to the ETF efficiency agenda, Clearstream is delighted to accommodate Capita Asset Services’ request for an issuance account at Clearstream so that they can directly process issuances with us on behalf of their customers, making the ETF process in Europe less convoluted. This is in line with Clearstream's longstanding aim of improving the efficiency of investment fund processing including through its Vestima platform.”
Justin Cooper, Chief Executive at Capita Asset Services Shareholder solutions stated: “Capita welcomes the chance to proactively demonstrate our commitment and desire to add value to the ETF processes. This new development will allow us to be progressive in the ETF cross-market settlements efficiency without compromising the service or adding risk.”