In an attempt to boost market efficiency and liquidity in the European markets, BlackRock is working out “cross-border,” U.S.-styled unified exchange traded funds that would allow international trades to be settled in one location.
Currently, Europe-listed ETFs are issued and traded on more than one national stock exchanges, which are then settled in the national securities depository of the country where the trade was placed, reports Clare Hutchison for Reuters.
The Europe-listed ETF market has 1,962 available products, but there are currently 6,222 listings spread across 23 European exchanges, reports Philip Stafford and Chris Flood for the Financial Times.
An investor in one country would have to hold a depository account in his or her home country and the foreign country, updating both with any changes in positions and following post-trading regulations in both countries, which BlackRock argues as complex, costly and time consuming.
BlackRock is now working on an international security structure that would allow trades to be settled in one location. The money manager believes that the new cross-border fund structure would help boost liquidity and cut transaction costs in the growing $220 billion European ETF market.