Euroclear was approached by the investment banking community few years ago to help develop a more efficient ETF market and enable future growth.
In partnership with the industry, we developed a new issuance and post-trade solution for ETF instruments. This involves a new international structure of the kind currently used for Eurobonds and Depositary Receipts (DRs).
This new structure is now proven with multiple issuers and steadily rising volume. It leverages the ICSD network and settlement process to:
- Removes the need to move securities from one market to another
- Create a single pool of securities
- Allows ETF issuers to list their international ETFs beyond Europe
The new structure benefits the market by:
- Improving settlement rates
- Reducing mid- and back-office costs for market participants
- Improving liquidity by facilitating the expansion of the borrowing and lending market