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Capita Asset Services and Clearstream, the post-trade services provider of Deutsche Börse Group, have joined forces to improve the issuance process for exchange-traded funds (ETFs) in Germany, one of Europe’s largest markets for ETFs.
The partnership allows Capita, as registrar and asset managing services business, to open an issuance account with Clearstream and directly mark balances up or down in Clearstream’s books, as required.
This will go hand in hand with improved reconciliation procedures applied between the German central securities depository (CSD) Clearstream Banking, and Capita, as fund registrar, to enable more secure and efficient cross-border transactions.
The streamlined issuance model, set to go live in Q1 2014, will contribute to meeting market demand for more efficient issuance for ETFs in Europe, where the development of the market lags far behind the US.
According to data from the World Federation of Exchanges, the volume of ETF trades in Europe was around $532.4 billion from January to the end of September 2013, compared to $8.17 trillion in the Americas.
Participants often cite the more fragmented exchange and settlement landscape in Europe as one of the reasons for the much lower global share of the market compared to the US.
Marc Kieffer, Head of Issuance and Distribution Services at Clearstream, stated: “Contributing to the ETF efficiency agenda, Clearstream is delighted to accommodate Capita Asset Services’ request for an issuance account at Clearstream so that they can directly process issuances with us on behalf of their customers, making the ETF process in Europe less convoluted. This is in line with Clearstream’s longstanding aim of improving the efficiency of investment fund processing including through its Vestima platform.”
Justin Cooper, Chief Executive at Capita Asset Services Shareholder solutions, added: “Capita welcomes the chance to proactively demonstrate our commitment and desire to add value to the ETF processes. This new development will allow us to be progressive in the ETF cross-market settlements efficiency without compromising the service or adding risk.”