Euroclear Bank, the international central securities depository (CSD), in partnership with BATS Chi-X Europe (BATS), the continent’s largest stock exchange, announced the first exchange-traded fund (ETF) to be listed on BATS with an international securities structure.
The iShares MSCI USA Dividend IQ UCITS ETF, available to trade on BATS from 9 June, “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.
The partners comment that multi-listed ETFs in Europe are often issued and traded on one or more national stock exchange and subsequently settle in the corresponding national CSD, which 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.
“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,” said Mark Hemsley, chief executive officer (CEO), BATS Chi-X Europe.
“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.”
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