BlackRock moves toward cross-border trading structure for ETFs
BlackRock plans to build an industry standard for ETFs designed to make trading and settlement of the funds simpler and cheaper. Its iShares division has expanded its partnership with Euroclear and will initially restructure 20 of its funds, which will be issued and settled in just one pan-European central securities depository, meaning they can be more easily traded cross-border at a better price for investors.

iShares has expanded its partnership with Euroclear Bank to restructure 20 of its exchange traded funds (ETFs) so that they can trade cross-border more simply and cheaply for the end investor.

The partnership means that more iShares ETFs can be bought and sold in different markets but will be issued and settled in just one pan-European central securities despositary (CSD). This post-trade system is cheaper and easier, compared to the traditional European system of settling an ETF trade in the same country where it was bought or sold.

iShares issued the first ETF in an international structure in 2013 with the hope to reform ETF trade processing and settlement across Europe. The U.S. currently uses one CSD however European markets are still fragmented.

The new system for ETFs is the same as has been used for around 40 years with Eurobonds, according to Bernard Tancré, head of business solutions, investment fund services at Clearstream.

There are now 29 iShares ETFs with $3.1 billion of assets using an international CSD, and the ETFs vary from short duration corporate bonds and European equities to U.S. buybacks and smart beta funds.

Leland Clemons, global head of iShares capital markets at BlackRock, said iShares’ partnership with Euroclear and Clearstream to create a multi-national central settlement and clearing venue for European securities is in order to make ETF trading more efficient.

“We hope to build an industry consensus around this simpler model. It is exciting to see more and more of our funds transition onto this system, which we are confident is valuable for our clients and for the industry as a whole,” he said.

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