BlackRock has said its plans to launch an exchange traded fund (ETF) with an international security structure should improve trading conditions and lower costs for investors.
The company, the world’s biggest asset manager, said it is launching the first iShares ETF which will be settled in an international central securities depository, Euroclear Bank.
BlackRock said other cross-exchange listed ETFs in Europe are traded on one or more national stock exchange and settle in the central securities depository where the trade is executed, which causes inefficiencies when ETFs are traded across borders.
By using a single European settlement location, BlackRock said it is expected the new international ETF structure will improve trading liquidity, ease cross-border ETF processing and significantly lower transaction costs for investors.
BlackRock said a single settlement location for ETFs had been in place in the US for years and had been effective.
Tim Howell, chief executive of Euroclear, said ETF trade processing across borders in Europe has “long suffered from inefficient, complex and labour-intensive post-trade processes”.
“We believe the new international ETF structure that we and BlackRock will launch later this year will transform ETF trading and settlement in Europe,” he said.
BlackRock said after the pilot programme had been successfully completed additional ETFs would be issued using the new international security structure.
