International central securities depositary (ICSD) Euroclear Bank and State Street Global Advisors (SSgA) plan to merge a proposed 13 SPDR ETFs to an international ETF structure under Irish Law.
This is the first conversion from a domestic structure to an international structure that would remove the inefficiencies and reduce the costs associated with the current market practice.
The SPDR ETFs will be issued and settle for the first time in an ICSD. It is intended that these funds will migrate to the Euroclear-designed international structure towards the end of the year.
In addition to the primary market issuance process taking place in the ICSD, settlement of transactions occurs within the ICSD structure. Local CSDs can also provide post-trade services for internationally-structured ETFs via their links with the ICSD.
Currently, the 13 ETFs are listed on Euronext Paris, Euronext Amsterdam, Euronext Brussels, Borsa Italiana, SIX Swiss Exchange and will also list on the London Stock Exchange for the first time.
Stephan Pouyat, global head of capital markets at Euroclear, says: “We applaud SSGA’s recent announcement to rationalise their offering. By simplifying the issuance and post-trade processing in the European ETF market, liquidity providers will be able to significantly improve service levels towards end investor clients and ultimately lower the cost of owning ETFs.”
Paul Young, head of capital markets group, SPDR ETFs EMEA, says: “We anticipate that the new international structure will alleviate many of the operational complexities, costs and risks when settling ETF units and realigning them in the incumbent CSD structure. This is an exciting development and further demonstrates our commitment to enhancing the service we offer clients.”