London
07 June 2011
Reporter: Ben Wilkie
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Euroclear integrates ETF order routing and settlement


Euroclear UK & Ireland (EUI) has launched a new service that integrates and automates exchange-traded fund (ETF) order routing and trade settlement. The service will be available to institutional and retail clients in the UK via IFAs and fund platforms.

By leveraging the EMX Message System, fund distributors will be able to route ETF subscription and redemption orders using the same infrastructure they currently use for mutual fund order flows. Settlement of ETF trades can then take place at EUI, which currently settles trades in more than 1,600 ETFs.

Underscoring the UK’s strong appetite for ETF investment, the value of ETFs held through EUI tripled over the past three years to approximately £64 billion (EUR 73 billion).

Yannic Weber, chief executive officer of Euroclear UK & Ireland, said: “By combining Euroclear UK & Ireland’s comprehensive settlement capabilities with the order-routing prowess of the EMX Message System, we are uniquely placed to deliver a fully integrated, end-to-end service for ETFs. On the one hand, we are providing a solid fund processing infrastructure to a growing retail and IFA community. On the other hand, we are delighted to extend our order-routing service to support the ETF business of major fund promoters and distributors, for both the UK institutional and retail markets.”

David Bower, head of marketing for BlackRock iShares EMEA, stated: “We welcome the move by Euroclear to enable fund platforms, and therefore the IFA community, to automate order flows via the EMX Message System in our suite of “iShares” ETFs. This is an important development for the ETF industry. BlackRock is committed to finding robust solutions for our clients through dedicated agreements with experienced market-infrastructure service providers like Euroclear.”

Dorcas Phillips, vice president ETF sales and marketing at Morgan Stanley, commented: “As an “Authorised Participant” for many ETF listings, we see the Euroclear/EMX initiative as a significant opportunity for the UK investment fund industry. Morgan Stanley looks forward to working with Euroclear UK & Ireland to provide an efficient and automated service to help UK retail investors access the fullest range of ETFs, according to their evolving investment decisions.”

Thornsten Michalik, Global Head of Deutsche Bank X-trackers, said: “We applaud moves to automate access to our “db X-trackers” range of ETFs. We expect Euroclear UK & Ireland’s move to automate ETF order routing and settlement on an STP basis will benefit the IFA and retail community in terms of faster and safer processing, and less complexity.”

Global assets under management in ETFs and exchange-traded products are anticipated to increase by 20 per cent to 30 per cent annually over the next three years, taking the global ETF/ETP industry to USD 2 trillion (EUR 1.4 trillion) according to BlackRock research.

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