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ETF Securities completes acquisition of Gold Bullion Securities products


Exchange-traded commodities provider ETF Securities has formally completed the acquisition of Gold Bullion Securities, the world’s first gold ETCs, listed on the London Stock Exchange and

Exchange-traded commodities provider ETF Securities has formally completed the acquisition of Gold Bullion Securities, the world’s first gold ETCs, listed on the London Stock Exchange and the Australian Stock Exchange.

The acquisition will bring to an end the marketing agent agreement between Lyxor Asset Management and Gold Bullion Holdings and Gold Bullion Securities; ETF Securities, whose existing ETCs represent combined assets of some USD7bn, will henceforth become marketing agent to the ETCs.

The Société Générale subsidiary will no longer act as marketing and distribution agent, or as liquidity provider for Gold Bullion Securities on the European stock exchanges where it is listed.

‘The acquisition of these two gold ETCs demonstrates ETF Securities’ commitment to be the leading provider of exchange-traded commodities,’ says chairman Graham Tuckwell (photo). ‘These products will fit well within our commodities platform and will be part of an expanded marketing effort for gold products in particular.’

James Burton, chief executive of the World Gold Council, adds: ‘The world’s first two gold ETFs have played a pivotal role in the development of the allocated, physically-backed, gold ETF market, which now represents more than 1,093 tonnes of global gold demand.

‘Gold is a unique asset. Its safe haven and diversification benefits are clear and it bears no credit risk and therefore involves no counterparty and is no one else’s liability. These characteristics are extremely attractive to investors in the current financial environment.’

The change in ownership of Gold Bullion Securities will have no effect to the daily operations, management, pricing and liquidity of the products. HSBC Bank USA, the world’s leading custodian for physically backed ETCs, will continue to provide secured custodial services for all gold bullion, while Rawlinson and Hunter, which provides administration services to more than 120 ETCs, will continue to administer daily operations.

Société Générale has ceased to be a liquidity provider for Gold Bullion Securities, while Flow Traders and Nyenburgh, the leading market-makers for ETCs in Europe, have signed contracts with various exchanges in markets where Société Générale was previously quoting. More than 18 authorised participants and market-makers are currently trading the full range of ETF Securities ETCs.

Both Gold Bullion Securities products are backed by allocated metal, uniquely identifiable bars that carry no bank credit risk and are held in trust in London by HSBC Bank USA. The metal held with the custodian must conform to the rules for good delivery of the London Bullion Market Association.

Securities are only issued once gold is confirmed as being deposited into the ETF Securities’ bullion account with the custodian. No precious metal is borrowed or loaned out and thus does not earn any income.

The European ETC is listed on the London Stock Exchange, where it trades in US dollars and sterling, and it trades in euros on Euronext Paris, Deutsche Börse and Borsa Italiana. The other Gold Bullion Securities product is listed on the Australian Stock Exchange and trades in Australian dollars. Assets for the two products total USD3.3bn.

Before the acquisition, ETF Securities had owned a one-third interest in Gold Bullion Holdings, while the World Gold Council and its members had owned the remaining two-thirds. The council will continue to partner with ETF Securities in the marketing of gold ETCs, including Gold Bullion Securities and ETFS Physical Gold.

ETF Securities also offers a range of more than 120 ETCs including physical, long, forward, leveraged and short exposure to a wide range of commodity sectors, traded in euros, US dollars ands sterling and listed on the London Stock Exchange, Euronext Paris, Euronext Amsterdam, Deutsche Börse and Borsa Italiana.

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