Contrary to other cross-exchange listed ETFs in Europe, which settle in national central securities depositories (CSDs), the new iShares ETF will be issued and settled in an ICSD such as Euroclear Bank.
Euroclear CEO Tim Howell said that the ETF trade processing across borders in Europe has been suffering from inefficient, complex and labour-intensive post-trade processes.
The new international ETF settlement location in collaboration with BlackRock will be introduced later this year, which will offer centralizes settlement for ETF trades conducted on multiple trading venues, Howell added.
The new single European settlement location will boost the trading liquidity, ease cross-border ETF processing and considerably reduce transaction costs, claims the company.
Additional ETFs will be issued using the new international security structure, after the pilot program that is to be launched in the next few months successfully completes.
The US has already been using a single settlement location for ETFs, which boosts efficiency at all levels of trading, clearing and settlement.
BlackRock had asset under management (AUM) of $3.936 trillion as of 31 March 2013 and the company offers mutual funds, iShares ETFs and other pooled investment vehicles.
