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Hong Kong chooses Euroclear international ETF structure

Hong Kong Exchanges and Clearing (HKEX) is collaborating with Euroclear Bank, the Brussels based international central securities depository (ICSD), to enhance the distribution of European exchange traded funds (ETFs).

HKEX is Asia’s first stock exchange to adopt the ICSD settlement model in Euroclear Bank and European ETF issuers will now be able to expand their distribution network to Asia and grow ETF liquidity.

Euroclear said that its international structure for ETFs will bring increased efficiency to a process that was previously only supported by fragmented domestic market practices across Europe. Investors will benefit from improved settlement efficiencies and reduced costs and risks.

A €230bn market

Launched in 2013, Euroclear's international structure for ETFs provides one place of settlement, an ICSD, that significantly reduces the complexity, cost and risk involved in ETF issuance. ETFs with a value of €230 billion (US$271 billion) are currently issued in the international structure.

“We are excited to introduce the ICSD settlement model for the ETF industry in Hong Kong,” said Brian Roberts, head of exchange traded products at HKEX. “The ICSD link, which is proven effective in narrowing spreads and driving liquidity, will reinforce Hong Kong’s position as Asia’s ETF marketplace.”

Mohamed Rabti, deputy head of FundsPlace, Euroclear, added: “We welcome this collaboration with Hong Kon Exchanges and Clearing and are extremely pleased to be the first ICSD to extend an efficient global distribution of international ETFs.”

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