iShares has pioneered more efficient settlement in the European exchange traded fund (ETF) market.

The asset manager has joined forces with Euroclear to launch Europe’s first ETF that can be settled in one pan-European location.
This move is a big step forward for the European ETF industry given that these funds have typically settled in the national CSD of the exchange where that trade was executed.

iShares said the international security structure will “greatly improve and simplify” the post-trade process that will ultimately result in growth in the European ETF market.

Stephan Pouyat, global head of international markets, Euroclear said: “We’re hugely proud of the results of our work with BlackRock this year. The realisation of this new international ETF asset class marks another step in the development and maturation of the European ETF market.

"Simplifying the issuance process and providing uniform settlement practices regardless of trading venue will make it easier for investors to trade these ETFs. This will ultimately improve liquidity in the market, which should have a positive effect on processing costs for the end investor.”

The new fund - iShares euro STOXX 50® ex-financials Ucits ETF – is physically-replicating, investing in blue chip stocks from 12 Eurozone countries, while excluding companies from the financial sector, potentially providing investors with a less volatile exposure to eurozone equities. The fund has a total expense ratio of 20 basis points.

“Eurozone financial stocks are likely to exhibit volatility in 2014 and this ETF provides a building block for investors to express their views, by either side-stepping the sector or specifically targeting it by adding other financials-focused funds or single stocks to their portfolios,” said Tom Fekete, head of product development for iShares Emea.