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Navesis-ETF, an electronic exchange-traded funds (ETFs) trading platform, has teamed up with Calastone, a specialist provider of order-routing, settlement and reconciliation services to the fund management industry, to improve the way fund platforms, supermarkets and wraps – key intermediary distribution channels – transact in ETFs.
The service will enable fund platforms, supermarkets and wrap providers the ability to execute ETF transactions via a low-cost transaction model that will obtain efficient execution for their end clients.
Distributors will also be able to benefit from Calastone’s trade notification service which will automatically route ETF settlement instructions to either the venue of settlement, or settlement agent.
The collaboration with Calastone represents another landmark for the Navesis-ETF trading platform, a joint venture between inter-dealer broker Tradition and investment bank Nomura. The platform, which launched in February 2012, combines Tradition’s proprietary technology and experience in over-the-counter trading with Nomura’s insight as a leading ETF market maker and authorised participant.
Commenting on the Calastone collaboration, Jason Griffin, Head of Sales at Navesis-ETF, said: “The link-up of Navesis and Calastone is a market-changing event. Market desire for an efficient means of electronic execution has had a major impact on the investment market and the type of products being distributed and we believe Calastone is excellently placed to provide distributors direct access to the ETF market via Navesis.”
He added: “The launch of this new infrastructure will allow Navesis to make efficient execution in ETFs available to the mutual funds market via a single technical connection to the Calastone transaction network. The simplicity of this solution will allow the platform market to better service their IFA clients and ultimately the end investor.”
Dan Llewellyn, Managing Director of Product at Calastone, said: “Over the last year we have seen increasing interest from both traditional mutual fund distributors and ETF issuers regarding how these two very different market participants can create the market infrastructure to enable direct automated trade execution. We are now delighted to announce that after a number of industry meetings that encompassed platforms, authorised participants and issuers, Calastone and Tradition Financial Services have come together to allow the platform market to directly access ETFs via the Navesis-ETF Multilateral Trading Facility.”
The link-up comes at a time when ETFs are growing in popularity with IFAs and wealth managers across Europe, many of whom transact via fund platforms, supermarkets and wraps. The trend towards ETFs and other low-cost passive investment products is being driven, in part, by regularity changes such as the UK’s Retail Distribution Review (RDR), which has outlawed commission payments in favour of fee-based advice, but also by the failure of active managers to consistently outperform.
Nick Blake, Head of Retail at Vanguard, an ETF issuer, said: “An increasing amount of advisers are recognising the benefits that ETFs can add to a low-cost, well-diversified portfolio. Advisers are increasingly voting with their feet when it comes to a platform able to support the efficient use of ETFs and any initiative that makes ETFs more accessible to more investors has to be good news.”
Kris Walesby from ETF Securities, a leading provider of commodity-related ETFs, added: “Bringing together the operational efficiencies provided by Calastone with the execution ability of Navesis will enable IFAs to access exchange-traded products (ETPs) at the daily net asset value in a cost-efficient manner. This solution is one that both the investment and the platform communities have been demanding for some time and which will open up a new wave of ETP interest, especially set against the constructive background of the RDR.”