ETF Securities to expand Europe’s first and world’s largest Exchange Traded Currency platform with the launch of 10 new Euro-based Currency ETCs on Xetra …..
- 10 new Euro-based Currency ETCs
- Long or short exposure to the EUR versus G-10 Currencies including (CHF, GBP, JPY, NOK, and SEK)
- Fully collateralised and include exposure to local interest rates
- Will be listed on the Deutsche Börse (Xetra)
- Exposure to world’s most liquid asset class through a total of 28 Currency ETCs
The upcoming listing of 10 new Euro-based Currency ETCs on the Deutsche Borse adds to ETF Securities’ commitment to the German market. ETF Securities is already an established player in Germany with over 114 Commodity ETCs and 11 ETFs listed on Xetra, totaling approximately $1.5 billion of local investment and close to $200 million weekly trading volume on Xetra.
The 10 new Currency ETCs will track Morgan Stanley Foreign Exchange Indices (MSFXSM Indices) and are designed to replicate a fully collateralised long or short investment in EUR versus CHF, GBP, JPY, NOK, or SEK and also provide exposure to local interest rates.
The 10 new Currency ETCs will complement the existing platform of 18 Currency ETCs listed on the London Stock Exchange (LSE) on the 12th November 2009 providing long or short passive exposure to G10 currencies versus the US Dollar and include AUD, CAD, CHF, EUR, GBP, JPY, NOK, NZK and SEK. Since the launch of the Currency ETC platform, assets have grown to approximately $50 million and weekly trading volumes have risen strongly, up over 200% since start of 2010.
Currency ETCs which are Long USD and short G10 currencies have seen the most interest from investors, making up 81% of assets. ETFS Short EUR Long USD (LSE: SEUR) has been the most popular trade in 2010, capturing 50% of new assets, while the Australian dollar held the most net long positions.
All Currency ETCs are fully collateralised in order to mitigate counter-party risk and listed in the ETC segment of the Deutsche Börse or the LSE.
The 10 new securities to be listed on the Deutsche Börse are:
|ETFS Long CHF Short EUR||DE000A1DFSA1|
|ETFS Long GBP Short EUR||DE000A1DFSC7|
|ETFS Long JPY Short EUR||DE000A1DFSE3|
|ETFS Long NOK Short EUR||DE000A1DFSG8|
|ETFS Long SEK Short EUR||DE000A1DFSJ2|
|ETFS Short CHF Long EUR||DE000A1DFSB9|
|ETFS Short GBP Long EUR||DE000A1DFSD5|
|ETFS Short JPY Long EUR||DE000A1DFSF0|
|ETFS Short NOK Long EUR||DE000A1DFSH6|
|ETFS Short SEK Long EUR||DE000A1DFSK0|
The new additions to the currency ETC platform will offer greater choice and flexibility for local investors, enabling them to take long or short exposures against the Euro. Having currency ETCs based on the Euro will allow investors to trade strategies predicated on European macro dynamics. With the Euro being weighed down by debt and default concerns in the current environment, investors will be able to use of the new currency ETCs such as ETFS Long CHF Short EUR to play the relative safety of the Swiss Franc or ETFS Long NOK Short EUR to play the relative fiscal strength of the Norwegian Krone versus the Euro.
Currency ETCs are intended for investors wishing to diversify their portfolio through the addition of a new asset class which has a low correlation with equities and bonds, or for those investors wanting to take advantage of tactical or strategic macro opportunities using the foreign exchange market.
ETF Securities is expanding it’s Currency ETC platform due to investor demand for increased choice of secure, transparent and liquid exchange traded products. Currency ETCs are backed by eligible collateral to the value of at least 100%* of the total value of all Currency ETCs outstanding and is held in a segregated custody account by BNY Mellon. The collateral is adjusted daily to ensure credit risk is minimised. Currency ETCs are backed by the same eligible collateral criteria as ETF Securities’ existing Commodity ETCs. With Commodity ETC assets having nearly tripled in 2009 and volumes having doubled, it is clear that investors have widely accepted the ETC structure as a secure vehicle of choice for exposure to commodities. As a result, this is now been extended to include currencies.
Currency ETCs provide accurate and transparent currency exposure to recognised benchmarks in a single trade. In addition, Currency ETCs require no foreign currency account and no trading or management of futures/forward contracts as ETCs are simply priced off new currency indices published by Morgan Stanley.
Nik Bienkowski, Chief Operating Officer, commenting on this innovative launch said:
“ETF Securities is extremely proud to be able to be offering these ten new exciting Currency ETCs which use the same widely accepted structure as Commodity ETCs. This will broaden our currency offering to include 10 long and short Euro Currency ETCs in addition to the existing 18 long and short USD Currency ETC”.
“Currencies have been one of the best performing asset classes, along with commodities, over the past 1 year, 3 years and 5 years. Currencies also have low correlation to other asset classes and low volatility, making currencies an asset which can improve portfolio performance through increased diversification.”
Martin Arnold, Senior Research Analyst, commenting on this innovative launch said:
“Eurozone debt problems, and Greece’s in particular, remain a key issue for FX investors, at least until a formal resolution to the situation is achieved – the EU Commission has given Greece a mid-march deadline to provide concrete evidence that its deficit-busting plan is working. In response to the debt situation in Europe and the continued removal of liquidity support by global central banks, sentiment in the FX market has changed dramatically in recent weeks as investors increasingly question whether the strong performance of risk assets in 2009 can be sustained in 2010. Not surprisingly, short Euro strategies have been popular and profitable, with our currency ETCs providing investors with an easy way to take advantage of these themes”.
Source:ETFWorld – ETFSecurities