PIMCO has launched the first actively managed fixed income exchange traded fund (ETF) in Euroclear’s international structure, launching its Low Duration Corporate Bond Source UCITS ETF on the London Stock Exchange.
The primary market issuance will be in Euroclear Bank, the international central securities depository (ICSD). Over-the-counter and on-exchange trading will take place within this structure, and local CSDs can provide post-trade services via respective links with Euroclear.
Stephan Pouyat, global head of capital markets at Euroclear, said: "PIMCO is embracing more efficient post-trade processing, circumnavigating the need for time-consuming realignments and extra inventory buffers when buying an ETF in one domestic market, and selling it on in another.”
“As a result of issuing in this international format, bid/offer spreads are expected to tighten considerably, which should drive greater investor interest in ETFs across Europe and beyond.”
The listing intends to provide greater simplicity and reduce risk and processing costs. Investing firms can also benefit from increased settlement efficiency through a longer intraday settlement window and a pool of international clients within Euroclear’s settlement lending programme.
Howard Chan, ETF product manager, said: “PIMCO is known as an innovator offering value-added ETFs through active and smart beta strategies. This step continues that spirit of innovation to improve European ETF trading dynamics.”
