Press releases 2004

29 September 2004

NEW PRODUCTS AND TRADING ARRANGEMENTS SET TO BOOST INTEREST IN ETFS ON LONDON STOCK EXCHANGE

From the 4th October the London Stock Exchange will welcome four new Exchange Traded Funds (ETFs), covering indices in China, Japan and European small and mid cap companies.  These new ETFs will significantly enhance the current range of investment opportunities offered by ETFs, with the Chinese ETF in particular giving UK retail investors the most flexible, transparent and cost effective way to invest in Chinese equities.

The new ETFs will combine with improved trading arrangements being introduced this week to give a further boost to investor interest in ETFs.  The most significant of these changes is the transfer of all ETFs to SETSmm, the Exchange’s trading platform that combines the price-formation advantages of electronic order book trading with continuous liquidity provision provided by dedicated market makers. 

Martin Graham, Director of Market Services at the London Stock Exchange, said:

“ETFs offer a simple, low-cost way to gain exposure to a broad range of indices and asset classes.  Whether they are used actively to balance a portfolio, or are held simply to track an index, all investors benefit from the advantages of an easily traded, stamp-duty free product.  ETFs are not yet as widely-used in Europe as in the United States, but interest is continuing to grow. We believe the improvements we have made to trading arrangements will result in better liquidity, helping to make them an even more attractive investment.”

Bruce Lavine, Head of iShares in Europe at Barclays Global Investors, commented,

“ETFs are increasingly being seen as a useful tool that delivers institutional level products and pricing to investors both big and small. As the leading provider globally of these funds, we continue to expand the breadth and depth of our product set to reflect the demands we are seeing from investors.”

ETFs were launched on the London Stock Exchange in April 2000.  The value traded in 2004 up to the end of August was £3,078 million, a nearly 40 per cent increase on the £2,209.17 million value traded in the same period last year.   According to recent figures from Morgan Stanley, since 2003 the London Stock Exchange’s share of overall European transaction volumes in ETFs has doubled, rising from 5.33 per cent in the first half of 2003 to 10.81 per cent in the first half of 2004.   There are ten existing ETFs on the London Stock Exchange, including two introduced earlier this year which track indices based on corporate bonds and the FTSE 250.

For further information, please contact:

London Stock Exchange:
Catherine Mattison    +44 (0)20 7797 1395            
cmattison@londonstockexchange.com

Barclays Global Investors:
Melissa Mc Veigh    +44 (0)20 7668 8597 
Melissa.McVeigh@barclaysglobal.com
      

Notes to Editors

• The new ETFs are; iShares MSCI Japan  - to be launched on the 4th October, iShares FTSE / Xinhua China 25 to be launched on 25th October, and the iShares Euro STOXX Mid Cap and iShares Euro STOXX Small Cap to be launched on 1st November.

• ETFs are index tracking funds listed on the London Stock Exchange which provide diversification of unit but can be traded in the same way as shares. Eligible for inclusion in ISAs, attracting no stamp duty and with minimal management fees, they offer a cost-effective and simple way to track global indices.  There are currently ten ETFs listed on the London Stock Exchange.

• SETSmm is the Exchange's trading service for FTSE 250 and other leading securities.  By combining the best features of SETS with the support of the market making community SETSmm appeals to market users who want to trade electronically while still providing continuous liquidity provision from market makers.

• There are four registered market makers for ETFs.

iShares
• iShares is a range of exchange traded funds (ETFs) managed by Barclays Global Investors Limited.
• iShares has over 120 ETFs listed around the world with assets under management of £52 billion
• iShares plc and European Exchange-Traded Fund Company plc are Dublin based UCITS funds regulated by the Irish Financial Services Regulatory Authority.

Barclays Global Investors

• Barclays Global Investors (BGI) is a group of companies within the Barclays group  specialising in investment management.
• Barclays Global Investors is one of the world’s largest investment management companies with  assets of $1.1 trillion.
• Barclays Global Investors employs over 2000 people around the world and manages  money for  approximately 2,300 clients globally.
• For more information on Barclays Global Investors, please visit www.barclaysglobal.com