Euroclear Bank, a world leading international central securities depository, in partnership with Bats Chi-X Europe (BATS), the continent's largest stock exchange, announce the first exchange-traded fund (ETF) to be listed on Bats with an international securities structure.
The iShares MSCI USA Dividend IQ UCITS ETF, which will be available to trade on BATS from today marks a further step forward in the two firms' efforts to streamline ETF trade processing and settlement in the European market.
The iShares MSCI USA Dividend IQ UCITS ETF invests in US companies that target higher than-average dividend yields. Securities are screened according to their earnings quality and to ensure that the dividends they pay are both sustainable and persistent over time. The fund aims to provide European investors with access to high quality income streams.
Multi-listed ETFs in Europe are often issued and traded on one or more national stock exchange, and subsequently settle in the corresponding national Central Securities Depository (CSD). This causes inefficiencies in cross-border transactions. By using a single European settlement location, it is expected the international structure will improve liquidity, ease cross-border processing by removing the need for realignment of positions between CSDs for settlement and significantly lower overall costs and risks for investors.
Mark Hemsley, Chief Executive Officer, BATS Chi-X Europe, commented: "BATS Chi-X Europe obtained its Registered Investment Exchange (RIE) status a year ago with the express purpose of bringing market efficiencies to European ETF listings. This latest listing can be counted as proof of concept that listing on BATS brings material benefits to pan- European investors looking to access deep and liquid markets, and we are very much looking forward to working with Euroclear Bank to extend use of their services in the near future."
Stephan Pouyat, Global Head of International Markets, Euroclear, commented: "We are pleased to have a second international ETF available for settlement on our multi-currency transaction processing platform. I thank those involved at BATS and BlackRock for the smooth inaugural launch here at BATS of this ETF. We are ensuring that intermediaries purchasing this ETF will benefit from the safety of electronic delivery-versus-payment settlement, as well as delivering tangible benefits such as harmonised processing rules across trading venues and much improved asset servicing. And as the market knows, expedient reconciliation as well as the timely and accurate payment of dividends is vital to the attractiveness of ETFs - and the optimal functioning of the market."
Leland Clemons, Head of iShares Capital Markets in EMEA commented: "Market infrastructure improvements are imperative to support the rapid growth of the ETF industry and we hope to see this structure adopted by providers across Europe to continue to drive the ETF market evolution."