China Construction Bank picks Euroclear’s international ETF structure for first RMB listing
Brussels and Hong Kong, 25 March 2015 - Euroclear Bank, the Brussels-based international central securities depository (ICSD), and CCB International Asset Management Limited (CCBIAM), the asset management arm of CCB International (Holdings) Limited (“CCB International”), and Commerzbank AG have teamed-up to issue the first ever RMB-denominated money market ETF in international form: Commerzbank CCBI Investment Funds ICVC - Commerzbank CCBI RQFII Money Market UCITS ETF.
In this industry first, the ETF will be listed and traded in RMB, GBP and EUR on the London Stock Exchange, and settle directly in the ICSD – Euroclear Bank. CCBIAM and Euroclear Bank have combined their efforts to launch RMB settlement and laid the foundations for future RMB-denominated ETFs to develop in European markets.
Dr. Hu Zhang Hong, Chief Executive Officer of CCB International stated: “Our partnership with Euroclear is the result of months of co-operative discussion about how we can best tap into London-based investors, and in future, other pools of wealth. London has long been a champion in promoting initiatives and enhancing infrastructure, and has become a vibrant RMB center. I would like to pay tribute to the key infrastructure provider – Euroclear – in making today’s launch a reality. But this is just the beginning; we will continue the fruitful dialogue on the international RMB market with our Hong Kong and mainland regulators and our partners in Europe.”
Stephan Pouyat, Global Head of Capital Markets at Euroclear, commented: “We are proud to partner with CCBIAM in its historic decision to move ahead with today’s inaugural trading day of its first ever UK-based off-shore-RMB ETF in international form. Extending RMB issuance in Europe is a natural fit for us and showcases the value of our international platform as well as our global client base. An international ETF model such as this supports our clients’ quest for greater portfolio diversification possibilities and investment choices. It is an honour to be the infrastructure provider of choice to support CCBIAM’s ambition to distribute its ETF beyond Europe into Asia and America.”
Note to editors
ETF processing background
At present, cross-exchange listed ETFs are issued and traded on one or more national stock exchanges and ultimately settle in the national central securities depository (CSD) of the exchange where the trade is executed.
However, when ETFs are traded across borders, i.e. a firm buys an ETF listed on one national exchange and then sells the same ETF on a different country’s exchange, the firm’s trading desk is confronted with complex post-trade processes and risks.
The firm has to ensure that it moves the ETF from the national CSD where it has been bought to the national CSD where it is being sold. Moving ETFs from one CSD to another in order to deliver the ETFs to the buyer in another country often requires the firm to have accounts with multiple CSDs, to align the firm’s ETF positions among different CSDs and to follow different post-trade market practices in different markets. Realigning ETFs across multiple European markets throughout the trading day is expensive, time-consuming and operationally complex. In addition, it increases the potential for settlement fails, fines, counterparty compensation claims and ETF buy-ins to avoid settlement fails. These are also reasons why ETFs in Europe trade with such wide spreads, i.e. to compensate brokers for the risk and costs of moving ETFs across borders.
About CCB International
CCB International is an investment services flagship which is wholly-owned by China Construction Bank Corporation (“CCB”). Its core business, which is conducted through its three SFC licensed wholly- owned subsidiaries, namely, CCB International Asset Management Limited (“CCBIAM”),CCB International Securities Limited (“CCBIS”) and CCB International Capital Limited (“CCBIC”) (collectively known as “subsidiaries”) is divided into three main areas, namely Pre-IPO, IPO and Post-IPO which in turn form a comprehensive investment services value chain that offers a full range of products, and services including sponsoring and underwriting, financial advisory, corporate mergers and acquisitions and restructuring, additional issuance and placement of shares and refinancing for listed companies, direct investment, asset management, securities brokerage, market research, investment consultancy, etc.
Through the sustained development and international capital markets exposure, CCB International together with the subsidiaries have evolved into one of the top investment services institutions in Hong Kong featuring well-developed value chain, most diversified services, maintaining a close connection with the Mainland, creation of best values for the clients. In terms of Listing and placement, CCB International raised over HK$1,000 billion for over 100 companies in the global equity market. In terms of Direct Investment, CCB International was able to explore and foster a number of industry leaders, achieving outstanding investment returns as well as creating a win-win situation for its clients. In terms of Asset Management, CCB International established a couple of Private Equity Funds and Public Funds. In terms of Industry Investment Funds, CCB International established several private equity funds denominated in RMB, far outpacing its peers by amount and scale. In terms of Securities and Research, CCB International provided highly efficient services to its investors through one of the most advanced trading system in the world and offered its clients with professional research consultancy services based on its excellent research platform. In terms of Overseas Businesses, CCB International executed its global strategic arrangement in a steady and proactive way through the platform and resources supported by the parent company.
Euroclear is one of the world’s largest providers of domestic and cross-border settlement and related services for bond, equity, ETF and mutual fund transactions with offices in 15 countries across the globe and links to 46 international markets.
Euroclear is a proven, resilient capital market infrastructure committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise which includes over 100 central banks and supranationals.
The Euroclear group includes Euroclear Bank - which is rated AA+ by Fitch Ratings and AA by Standard & Poor’s - as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The group settles the equivalent of $682 trillion(€634 trillion) in securities transactions annually representing 182 million domestic and cross-border transactions. The group holds $900 billion (€833 billion) in average daily collateral outstandings, and over $28 trillion (€26 trillion) in assets for clients.
For more information please visit About us or follow us on Twitter @EuroclearGroup or on LinkedIn.