Press releases 2009
London Stock Exchange welcomes new ETC issuer
- Source chooses London to expand ETC offering
London Stock Exchange today welcomes Source, a new issuer of Exchange Traded Commodities (ETCs) onto its markets. Source has listed its Physical Gold ETC (Gold P-ETC) which tracks the performance of gold by investing directly in gold bullion and has chosen London Stock Exchange in order to make its product available for trading in US dollars.
Pietro Poletto, Head of ETFs and ETCs for London Stock Exchange Group, said:
“We are delighted to welcome a new issuer, Source, to our ETC market. Their new US dollar-denominated Gold P-ETC highlights the benefits of London Stock Exchange’s multi-currency service, which allows ETF and ETC issuers to offer products denominated in US dollars, as well as Sterling and Euro.”¹
There are currently 189 ETFs listed on London Stock Exchange, 1 Exchange Traded Note (ETN) and now 124 ETCs.
London Stock Exchange was the first exchange in Europe to offer listing and trading of ETCs when its ETC market launched in September 2006. The average daily number of ETF and ETC trades across London Stock Exchange Group grew 115% year-on-year in May to 13,607 and the average daily value of ETF and ETC trades grew 71% to £371m for the same period.
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For further information, please contact:
Jonny Blostone Press Office +44 (0)20 7797 1222
Notes to editors:
¹ Multi-currency service:
The ability to offer Exchange Traded Products (ETPs) for trading in US dollars is of particular importance for commodity products as the underlying commodity markets are referenced in US dollars. Offering an ETC tradable in US dollars removes the exchange rate risk associated with trading an ETP in one currency, for example Euros, when the underlying commodity upon which the ETC is based is quoted in US dollars.
About London Stock Exchange Group:
London Stock Exchange Group is Europe's leading diversified exchange business. It operates Europe's largest and most liquid equity market with over 500 member firms, holds the number one position in trading ETFs and securitised derivatives, and through its interest in MTS, is the leading platform for the trading of fixed income products.
London Stock Exchange itself is the world's most international exchange with nearly 700 overseas companies from over 70 countries on its markets. It has consolidated this position in the last three calendar years, having attracted 218 international companies which raised over £32 billion between them. These figures include international companies on AIM, London Stock Exchange's growth market, which has grown to become the world's most successful market for small and medium sized enterprises with over 1500 companies at the end of 2008.
Following its merger with Borsa Italiana in 2007, London Stock Exchange Group also now offers post-trade services such as netting, clearing and settlement on an efficient and competitive basis, and a comprehensive range of European bond trading services through MTS.
Source is a specialist provider of exchange traded products for European investors. It currently trades thirteen Exchange Traded Funds (ETFs), twenty two Treasury Bill Secured Exchange Traded Commodites (T-ETC) and one physical gold ETC (P-ETC).
Source is an open architecture platform created by Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley to enhance the performance and trading environment for exchange traded products in Europe. By creating common standards and augmented design features, Source’s products offer investors improved liquidity, reduced credit risk, increased transparency and more efficient competition. Other partners include Nomura, Banca IMI, IMC Group, Flow Traders and Nyenburgh.
Despite recent market turbulence, demand for ETFs and similar products continues to grow, with net European inflows of over EUR47 billion in 2008. Investors clearly value the simplicity, transparency and low cost associated with these products. Source believes that the market has even greater potential, and that improved product design and an enhanced trading environment are critical for further growth.
Liquidity: In the United States daily on exchange trading volumes exceed USD 90 billion (17 per cent of ETF assets under management), while in Europe that figure is approximately USD 2 billion (less than 2 per cent of ETF assets under management). Source intends to close that gap by focusing all trading on a single stock exchange, Deutsche Börse, offering very efficient total return products and allowing multiple brokers to participate on an equal footing. These are significant improvements over existing products.
Credit risk: A combination of risk diversification, third party monitoring and self-imposed guidelines are employed to provide strong investor protection. Source’s commodity products, for example, are the only exchange traded products that are secured exclusively by G-7 government bonds and cash.
These and other initiatives mean that Source is confident that its unique approach to exchange traded products will deliver a superior investor experience and rapid growth in assets. Source is committed to expanding the partnership approach of its platform and is actively seeking additional participants.