BlackRock partners with Euroclear and Clearstream to migrate 20 ETFs to international settlement structure
Centralised post-trade arrangements increase liquidity, efficiency and reduce cost
12 November 2015, [Brussels / London / Luxembourg] – BlackRock, Euroclear and Clearstream have partnered to migrate 20 iShares ETFs to an international issuance and settlement structure. BlackRock issued the first ETF with an international security structure in 2013, and has launched all new funds since March 2015 on this platform. These 20 ETFs, with $2.9 billion in assets under management Source: BlackRock, October 2015, are the first in the pre-existing range to transition to the new model.
Under this structure, the issuance and settlement of the ETFs are carried out by an international central securities depository (ICSD), such as Euroclear and Clearstream. Issuing and settling in a single pan-European location simplifies the post-trade process of ETFs, enabling market makers to offer more competitive trading spreads to investors, and also boost overall liquidity.
The fragmented nature of European financial markets means that many of the ETFs listed across multiple exchanges in Europe must settle in the national central securities depository (CSD) of the trading venue where the trade is executed. A single European settlement location facilitates cross-border ETF trading.
Stephan Pouyat, Global Head of Capital Markets at Euroclear, added: “What we are doing is effectively simplifying the European issuance and settlement process for this much sought-after investment product. The huge growth in European ETFs shows no sign of abating, and it is critical that the infrastructure providers like Euroclear have the right platforms and processes in place to manage the increasing volumes. Our model supports ETF issuer distribution in an efficient manner in Europe and beyond. Local CSDs can also provide post-trade services for internationally-structured ETFs via their links with the ICSD, achieving the best of both worlds.”
Bernard Tancré, Head of Business Solutions, Investment Fund Services at Clearstream, said: A significant advantage of this ICSD issuance model is that it utilises the well proven, and efficient settlement infrastructure for Eurobonds that market participants from around the world have been accustomed for more than 40 years. But regardless of whether a product issuer uses local CSDs or the centralised ICSD, seamless connectivity is crucial to the user experience, and we are proud to provide this system alongside our domestic issuance model.”
Leland Clemons, Global Head of iShares Capital Markets at BlackRock, commented: “As the global demand for European-domiciled ETFs continues to grow at pace, the ecosystem supporting the industry has never been more important. Our partnership with Euroclear and Clearstream to create a multi-national central settlement and clearing venue for European securities is testament to our commitment to making ETF trading more efficient. We hope to build an industry consensus around this simpler model. It is exciting to see more and more of our funds transition onto this system, which we are confident is valuable for our clients and for the industry as a whole.”
The 20 existing ETFs that are now in the new international structure are:
Note to editors
Euroclear group is the financial industry’s trusted provider of post trade services. At the core, the group provides settlement, safe-keeping and servicing of domestic and cross-border securities for bonds, equities and derivatives to investment funds. Euroclear is a proven, resilient capital market infrastructure committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise.
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 Euroclear group settled the equivalent of EUR634 trillion in securities transactions in 2014, representing EUR182million domestic and cross-border transactions. By June 2015, the group held EUR28 trillion in assets for clients.
As an international central securities depository (ICSD) headquartered in Luxembourg, Clearstream provides the post-trade infrastructure for the Eurobond market and services for securities from 53 domestic markets worldwide. Clearstream’s customers comprise approximately 2,500 financial institutions in more than 110 countries. Its services include the issuance, settlement and custody of securities, as well as investment fund services and global securities financing. With more than 13 trillion Euros in assets under custody, Clearstream is one of the world’s largest settlement and custody firms for domestic and international securities.
With over 190,000 investment funds on its fund processing platform Vestima and more than 10 million settlement instructions processed every year, Clearstream is one of the leading providers of investment funds services worldwide. The company is also the largest contributor to the standardisation of funds processing.
For more information about Clearstream, please visit www.clearstream.com
iShares is a global leader in exchange-traded funds (ETFs), with more than a decade of expertise and commitment to individual and institutional investors of all sizes. With over 700 funds globally across multiple asset classes and strategies and more than $1 trillion in assets under management as of September 30, 2015, iShares helps clients around the world build the core of their portfolios, meet specific investment goals and implement market views. iShares funds are powered by the expert portfolio and risk management of BlackRock, trusted to manage more money than any other investment firm. (Based on $4.506 trillion in AUM as of 30 September 2015.)